Plain text format

Yes, I have submitted to places that required me to submit in plain text.
I have separated my paragraphs with empty lines between them. Worked fine. I have never been much of a indentation fan...

Not to them, but I've used plain text for other publishers. Indents are really the only formatting most short stories need, so I wouldn't remove them and separate paragraphs unless specifically asked to do so.

I submit to DSF all the time, and having been accepted there I 've seen what the stories look like on their end when I get them back for proofing.

I'd say definitely space out the paragraphs. Indents you can take or leave.

Also I'd like to add that I really like submitting to DSF. They're very consistent in their slush reading and very good/professional to deal with at every stage of the process should you be accepted.

I put a space between paragraphs when submitting in plain text. Otherwise, the paragraphs all jumble together.