Highlighted text is showing up abnormally on "highlights and notes" sidepane
That looks like a problem with Adobe PDF file.

I tried it on a radon PDF downloaded from Web and it works fine, as long the PDF file is formatted correctly.



UPDATE !

In evaluating your Document, it shows a problem in text formatting (missing space between words). When trying to highlight selected text the Preview will obey the format given. 

The dotted line appears and shows the problem when trying to select text, it shows it as one block.

There is not fix for that AFIK, but you can try to get fresh copy of the document.

You can use this Tool to look it up when trying to select text



It might show you bad formatted PDF in the dotted line box.