I am using the picinpar package and don't know why the paragraph indentation is not working. The problem words are highlighted:

Notes:
- I am not stuck to using the
picinparpackage, but want to avoid having to specify the width of the figure at the point it is inserted. The example provided uses\includegraphicsto keep the MWE simpler, but my figures aretikzfigures so I use\inputinstead of ``\includegraphicsin my real use case. I tried the other solutions at the references question, and foundpicinpar` the easiest to use. - I thought perhaps the problem was that
\parskipand\parindentwere being rest within thewindowenvironment as in Why is \parskip zero inside a minipage?, but that solution (commented out) had no effect. - This work fine if the
parskippacakge is used, but I am trying to have the recommended indented paragraphs.
References:
Code:
\documentclass{article}
%\usepackage{parskip}% Works great with this.
\usepackage[demo]{graphicx}
\usepackage{picinpar}
\usepackage{showframe}
\usepackage{lipsum}
\usepackage{xcolor}% To highlight problem text
\newlength{\currentparskip}
\newlength{\currentparindent}
\newcommand{\MyWrapFig}[3][]{%
% #1 = options: number of lines, align
% #2= figure content
% #3= text content
%
%\setlength{\currentparskip}{\parskip}% save the value
%\setlength{\currentparindent}{\parindent}% save the value
%
\begin{window}[#1, #2,]
%\setlength{\parskip}{\currentparskip}% restore the value
%\setlength{\parindent}{\currentparindent}% restore the value
#3%
\end{window}
}%
\newcommand{\SomeMoreText}{Some text. Some more text.}%
\newcommand{\Text}{%
\SomeMoreText \SomeMoreText \SomeMoreText
\SomeMoreText \SomeMoreText \SomeMoreText
}%
\begin{document}
\section{First Section}
\MyWrapFig[1,r]{%
\includegraphics[height=1cm]{MyFigure}
}{%
\textcolor{red}{Here} is a paragraph that should \emph{not} be indented without parskip.
\SomeMoreText
\textcolor{red}{This} is the second paragraph which \emph{should} be indented without parskip.
\SomeMoreText \SomeMoreText \SomeMoreText
\textcolor{red}{Last} paragraph that \emph{should} also be indented without parskip.
\Text
}
\MyWrapFig[1,r]{%
\includegraphics[width=3cm]{MyFigure}
}{%
Here is a paragraph that should be indented without parskip.
\SomeMoreText
\textcolor{red}{This} is the second paragraph which \emph{should} be indented without parskip.
\SomeMoreText
\textcolor{red}{Last} paragraph that \emph{should} also be indented without parskip.
\Text
}
\end{document}

picinsis also a 2.09 package, isn't it? (And the licence prevents distribution so it is not in TL.) – cfr Jul 05 '15 at 01:52