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The only difference is you can not directly debug and execute a txt file.
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But I assume that this question is in the context of QTP and therefore most lib files, be they *.vbs, *.txt or *.qfl, don't offer much possibility of being successfullyexecuted under <u>both</u> the QTP and WSH runtime environments. If not, then the question was asked in the wrong forum.
I personally like to keep the 'vbs' extension reserved for scripts that can be executed by WScript. For QTP function libraries, I use the 'qfl' extension that was introduced with QTP 9.0 (I think). Helps cut down on the confusion of "Is the an executable script or a function library?".
Use the right editor and you'll get IntelliSense and code highlighting no matter which extension you use [img]/images/graemlins/smile.gif[/img]