No, dialogue is always its own paragraph. Like, pick up any fiction book and that's how it'll be. Or a book on grammar or whatever that is with a section on that.
Well actually, that's not entirely true. Dialogue of a different person goes on a different line. Stylistically, there's nothing stopping you from putting it mid-paragraph if that paragraph is also about that character. As long as it's clear to the reader who's speaking, it's okay. In fact, imo, it can actually make the dialogue and narrative flow better together than if you punctuated it with a line break.
Now, if you want to publish a work, each publisher has a different house style. They might want you to make dialogue its own line, but it's just their personal styling.
Though Lugia's last post was a bit long. It probably should have been split into two paragraphs anyway. The longer the paragraph, the harder it could be for some people to read. It's not necessary, but I personally don't like writing paragraphs that are /too/ long.
Anyway, yeah sorry for my absence. I've got stuff worked out now I think. I still have a few problems, but they're not nearly as big anymore.