Line based lyrics are no longer supported (I can't remember with which version). If you go to the global song settings override screen (Prefs, Overrides), there is an option there to convert line-based lyrics to bar-based lyrics.
This is from the user manual:
Convert line-based lyrics to bar-based lyrics In the previous versions, there were line-based lyrics, which could be entered for each line on the Notation window. You can no longer enter this type of lyrics, but if your existing song has line-based lyrics, Band-in-a-Box can convert them to bar-based-lyrics. This option allows you to choose how the conversion should occur when the song with line-based lyrics opens. The default is “Always (auto-split),” which will convert line-based lyrics to bar-based lyrics and splitting them into 4 bars. If you choose “Always (don’t split),” line-based lyrics will be converted but they won’t be split into 4 bars. You can also choose not to convert line-based lyrics automatically. If the current song has line-based lyrics, you can press the [Convert now] button to convert them to bar-based lyrics.