Basically, the way you’re approaching the problem is making it harder for you.
The idea with styles is that:
a) Your standard, default paragraph style (what would be ‘Normal’ in Word, if that helps) should be ‘No Style’, not a defined style as you’ve tried to do. Styles are really for exceptions / amendments to the default ‘No Style’ — not for the standard paragraph.
b) You set the default (‘No Style’) paragraph format in Preferences > Editing > Formatting — click in the dummy text box and set the fonts, indents, spacing, ruler etc from there. (OR: if you’ve already set it up in a document, then in the same dialog box, click 'Use Formatting in Current Editor).
Once you’ve done that, any new documents in this or any other project will use your default paragraph style (it will appear as ‘No Style’) and it will continue when you press Return.
That’s the basics: set the default paragraph format in Preferences > Editing > Formatting and then leave it alone.
a) The reason for using the default No Style this way is that it allows different compile formats to make suitable changes (eg Courier 12 pt for manuscripts, Palatino 10pt for eBooks etc) without you having to do anything. If you set a ‘body’ style with an explicit style, you have to do this work yourself and there are some odd effects.
b) There are a couple of ways to convert your now unwanted body style back to No Style. The easiest is probably to create a scrivening with all your documents, then highlight the first of your old-styled paragraphs. Click Ctl-S to get the Styles Panel, then right-click on the name of your style in the panel and click on ‘Select All Text with Paragraph Style’ — this will, not surprisingly…, highlight all such styled paragraphs. Then all you need to do is cmd-opt-0, which will apply ‘No Style’ to them all. NB: try this out on a dummy text first so you’re happy with what’s going on! (But cmd-z will undo it).
c) The reason you weren’t continuing your style before was that you had the Next Style dropdown box set to ‘No Style’. For future reference, this is on the dialogue box you get when you either create or redefine a style. Here I’ve set my List style to be followed by my List style… but I could choose any of the others, or none at all.
The way Scrivener uses styles is powerful, but there are a few assumptions you need to know — that’s actually true for Scrivener as a whole. If you try to use it just as a word processor, some elements will seems confusing — once you’ve go the (relatively simple) concepts, everything slots into place and you can start getting the real benefits.
If you’ve not already done it, it will really help you to do the Interactive Tutorial (on the Help menu) — it will only take an hour or so and it will introduce you to the main features and concepts which will really help you start using Scrivener productively much quicker. (This is true, even if you’re a V2 user — there’s a special section detailing the elements which have changed.)
Hope this helps.