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Each time you go into a contact or deal record you have to click "thread emails" at the top in order to get a sensible thread of emails (rather than a line item for each reply). This preference is not remembered in any way and you have to do it each time
Given that most people are used to using threads and that this feature was implemented relatively recently it doesnt make sense that there is no way to set your default as to how you want to use it and you have to select this every time