Squares appear usually for
* characters not available in the code page / font
* carriage return + newline, if displayed in a non-multiline edit field.
The grid view is a non-multiline edit field. If you have the same settings (regional setting, OS language, code page aso.), you should see the same on both Visual Studio grid views.
For replacing, you need to convert to nvarchar (Unicode) or varchar (8bit chars, depening on your code page):
select replace(cast(columnname as varchar(4000)), char(13)+char(10)', ' ')
from VW__TABLE
where columnname like '%'+char(13)+char(10)+'%';