I'm no BASIC man, as anybody checking the developer forum could vouch for by now ;-), but I'll have a go..
I think your problem comes down to the fact that your 'y' variable is initialized with the value 1 every time you call the subroutine. The subroutine returns immediately because of the 'if y<25 then return' condition. Consequently, y never gets to 25 and you don't get your carriage return.
You could just use a modulus of your 'x' value in the main loop. Not sure about the syntax, but something like
for x=0 to 255
print chr$(x)
if x%25 == 0 then print chrs$(13)
next x
Does BASIC have a modulus anybody?
In any event, bear in mind that there are lots of unprintable characters before when x < 32
