Ok, I'm confused then.
1. When you say embedded stylesheet, do you mean you're linking to a stylesheet stored in the Resources\Stylesheets folder, or do you mean you have style definitions defined in the topic itself in <style> blocks?
If it's the former, then the XML Editor, Preview window, and generated output should all show the styles you defined. If it's the latter, then they will be ignored because Flare will rebuild the topic when it's generated using the code blocks defined in the masterpage. Even though it appears you can modify the topic's page code from the <body> tag up, all that code is actually just temporary in the XML Editor to simulate the appearance of the generated topic. There is also code elsewhere that helps with that, as you'll notice that the stylesheet reference doesn't actually appear in the topic file until it's generated. Long story short, don't put style blocks in the topic's code -- add the styles to the topic stylesheet instead.
2. When you're looking at the topic code, how are you accessing it? Are you right-clicking on the topic in the Content Editor and selecting Open with > Internal Text Editor, or are you clicking on the "Send this topic to the Text Editor" icon in the toolbar? Or, are you just clicking the <t> icon in the toolbar? If it's either of the former options, then you'd see this in the Text Editor view:
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<p class="hcp4">7. In the <span class="hcp3">Slow Order Warnings</span> section, choose the minutes to wait before flashing and beeping alerts about items ordered.</p>
If it's the latter (clicking the <t> icon), then it would look like the following:
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<p+>7. In the <span+>Slow Order Warnings</span> section, choose the minutes to wait before flashing and beeping alerts about items ordered.</p>