I am having my paragraphs looking like so.
Blah blah blah blah
blah blah blah blah
Blah blah blah blah
So let’s say I have dialogue it should look like.
“blah blah blah blah”
She said “Blah blah blah”
BUT its looking like this.
“blah blah blah blah”
She said “Blah blah blah”
I cannot get that extra space to go away and have it looking normal. I can in SOME parts of my novel but not on others it was transferred from word, is there a setting I am missing here?
Going crazy
Well one thing that might help is to clean up the formatting when you paste it in from Word, as a very first step. There are tips for doing that in this knowledge base article. You mentioned some paragraphs being recalcitrant, so perhaps this command will clear out any formatting that the basic tools in Scrivener aren’t impacting.
I’m not familiar with the spacing scheme you are proposing, maybe I’m just not understanding it correctly. When designing a book, one typically chooses to either use spacing between paragraphs and no indents, or to use indents and no spacing (the latter is by far the standard in print and digital e-books). Save for constructs that are clearly not prose, such as bullet lists, changing the indent or spacing model between paragraphs shouldn’t be done (unless we’re talking about House of Leaves style artistic typesetting of course 
).
I suppose in Scrivener it doesn’t matter too much since you can make the output uniform when you compile, so if this is just a personal preference, then go for it. Consider using Formatting Presets to save your two different paragraph styles so you can more quickly switch between them.