I find the same problem usually after 100 characters. It's very annoying. It will send larger items as a picture message.

There is no setting on the Samsung Slyde m540 to increase character limit for text messages.
Upon doing some searches online, I found out that others have also experienced the same issue. Someone mentioned he had a limit of 139 and someone else said he had 150. But a user from a forum said he was able to send a message with 1000 characters. So I guess there must be something wrong with your unit. I suggest you have it checked with an authorized Samsung repair center or the store you purchased it from.