I resolved this issue by editing the html code of the signature in the database itself, removing the PRE tags. Using the Identities editor causes the signature to be wrapped in PRE tags, and these don't support word wrapping.
UPDATE - I didn't realise that you can actually edit the html in the Identities panel! Doh!
This of course would not be an issue if the sig is placed at the very foot of the document As RC is designed to do, but placing it at the top using this mod means that you intend to add your reply directly before your sig, which means you are typing your reply within the PRE tags which form part of the signature code. I can't find a way around this by formatting the signature any differently in the identities editor as PRE tags are always added. This is an oversight therefore on the mod's design. Editing the sig in the database directly is a work around.
Thanks, Paul A