I've got the same problem with almost identical format.

I've tried multiple paragraph marks, various break types, etc., but whenever
I update the TOC, the break is swallowed up.

What is funny is that if I use Alt-F9 in Normal View, the TOC code takes on
the Header 1 format of the following line but without the number and the
paragraph marks and section break disappear!

The other headers on that page have the proper numbers (2 ...) but my
Introduction just has the {TOC \h\l\o \* MERGEFORMAT } tag in front of it,
all in 18 Tahoma (as the other Heading 1 text).

Surely many others have this same problem? My document is nothing special
and this has been happening with others here.

Why is this and what can I do about this?

Thanks.