I have configured in UE the default word wrap to "Wrap at window edge". There are no other wrap settings for any file types. I have also checked the "Default word wrap on for each file".
Now when I open any file, there is wrap at about column 50. If I do any editing, the wrapping automatically changes to window edge, but for that specific paragraph only. I can get the wrapping to window edge for the whole file by doing Ctrl-W twice, which is not what I like to do every time I open a file.
My UE version is 16.20.0.1011.
Any ideas?

You are right, default word wrap on at window edge does not work as it should in UE v16.20.0.1011. The files are wrapped by default not at window edge. Disabling and enabling word wrap or maximizing and restoring the UltraEdit window solves the problem.

It looks like the number of characters per line is not initialized correct depending on current window width before applying word wrap. I played with some versions of UltraEdit and found out that this issue exists since UE v16.10.0.1021. Previous versions of UltraEdit display just opened files always correct wrapped at window edge.

The problem does not occur when opening files per drag and drop from file manager window to UltraEdit window.

I reported this issue by email to IDM and the wrong behavior could be reproduced by IDM support.

Update on 2011-03-11: This issue is fixed with UE v17.00.