I would recommend you to leave the checkbox disabled as it’s purpose is to convert new line characters into html <br> entities, which is only useful for text emails that don’t contain html, which the gravity forms email obviously does.
This is merely a convenience feature for those using basic WordPress emails. If it needs to be used in conjunction with basic emails and html emails, then the custom filter ‘mandrill_nl2br’ needs to be used to selectively disable the feature depending on the email being sent. That is a userland specific customization that would need to be made.