Cygwin-Xemacs: Seem to be in text-mode, but files display with ^M

I'm sure I'm confused about this, but I thought that Cygwin-Xemacs could figure out that if the filesystem a file was in was in text mode, that when I view a file containing \r\n line endings, that I won't see ^Ms display. I did browse through both the Cygwin and Xemacs faqs, but I couldn't find anything (probably because I couldn't find the magic search string). I seem to remember that Xemacs used to be able to tell whether a file was a "unix" file or a "dos" file, and put an indicator to that effect in the mode line, and display newlines "correctly", no matter what was in the file.