Loop "Forgets" to Remove Some Items

Answer

You're modifying the list you're iterating over, which is bound to result in some unintuitive behavior. Instead, make a copy of the list so you don't remove elements from what you're iterating through.

for char in textlist[:]:#shallow copy of the list# etc

To clarify the behavior you're seeing, check this out. Put print char, textlist at the beginning of your (original) loop. You'd expect, perhaps, that this would print out your string vertically, alongside the list, but what you'll actually get is this:

H ['H','e','y',' ','l','o','o','k',' ','W','o','r','d','s','!']
e ['H','e','y',' ','l','o','o','k',' ','W','o','r','d','s','!']['H','y',' ','l','o','o','k',' ','W','o','r','d','s','!']# !
l ['H','y',' ','l','o','o','k',' ','W','o','r','d','s','!']
o ['H','y',' ','l','o','o','k',' ','W','o','r','d','s','!']
k ['H','y',' ','l','o','k',' ','W','o','r','d','s','!']# Problem!!['H','y',' ','l','o','k',' ','W','o','r','d','s','!']
W ['H','y',' ','l','o','k',' ','W','o','r','d','s','!']
o ['H','y',' ','l','o','k',' ','W','o','r','d','s','!'] 
d ['H','y',' ','l','k',' ','W','o','r','d','s','!']
s ['H','y',' ','l','k',' ','W','o','r','d','s','!']!['H','y',' ','l','k',' ','W','o','r','d','s','!']Hy lk Words!