as far as i can recollect, shell mode worked for me until 21.5.4, now
i tried it with a recent build and what i get is
22:14:35 /usr/local/lib/xemacs-21.5-b6/info % ll
total 5992
-rw-r--r-- [...]
afaict, the shell process is not sending CRs to emacs, but emacs has
somehow started to expect them in the input stream...
the modeline tells me that the buffer is in binary mode