Raw Input 
This line is longer than 25 characters...
This-should-not-be-split-into-two-lines.
Ok, try this one. This should be spilt...
Desired Output 
This line is longer than 
25 characters...
This-should-not-be-split-into-two-lines.
Ok, try this one. This 
should be spilt...
Script and Comments
Script1 
[ 1] /.\{26\}/!b
[ 2] s/^\(.\{1,25\}\) /\1\n /
[ 3] s/^\(.\{1,24\}\)\n /\1 \n/
[ 4] /\n/!s/ /\n /
[ 5] P
[ 6] D
Comments
  1. 'Pattern Space' is abbreviated to 'PS'.
  2. Note
    Be sure that your sed supports using '\n' to specify a new line char in the second part of s///.
  3. If a line contains 25 or less characters, Step 1 will print it out, then start the next cycle.
  4. One of two characters next to the 'split-point' will be a space.
  5. Now the PS may contain 2 lines. If the first line contains less than 25 characters and the second one begins with a space, Step 3 will move the split-point one character forward.
  6. If the PS begins with a string longer than 25 characters, we insert a newline char at the end of that string.