Thanks all, problem solved.
AnthonyB the examples do not make the space after the # obvious at all.
peter thank you, it's fine now that I added the space after the "#".
I really appreciate both of you jumping in to help, and I hope the formatting requirement is made a little clearer!
For example: "A line starting with one or more number signs # followed by a space, defines a heading. The number of # characters correspondents to the heading level. Up to 3 levels are supported.