A. Basically because the file layout does not match that which you've told BCP.
If you have a native 6.5 format file then make sure you specify the -6 option on the 7.0 version of BCP.
Otherwise, use a hex-editor to open the file and check the layout. Look especially for missing carriage-returns and line-feeds. e.g. UNIX files use just a linefeed (LF, 0x0A) as a record terminator. NT used a carriage return plus linefeed (CR+LF, 0x0D0A).