Oh! That one irks the heck out of me! IN LINE!!! (lol)
Here's my reasoning for anyone (like my kids' father) who insists on saying, "on line":
It's a line that's made up of people. That means that the people who make up that line are "in" it - not "on" it. Maybe people who say "on line" imagine that there's an imaginary line that all the people IN that line are standing on (which is a far less flattering image of people IN a line than seeing them as part of the group that, in fact, makes up the line anyone is talking about in the first place. Picturing people standing on an imaginary line takes the concept of a line from being something former by people by being something they're compelled to stay ON, rather than be a part of the line itself.
And YET, do you think I've ever managed to convince that particular individual I mentioned that he's completely WRONG about saying "on line"??? Not on your life. I've known this "irksome individual" for 39 years now, and he has yet to come around, see the error of his ways, and say, "IN line".
On top of everything else, you'd think that now the Internet exists, people who say "on line" might want to see that now there's even more reason to say "in line" - but, NOOOOOOOO..... They'd rather let "on line" and "online" be confused, rather than get rid of their thing that there's some imaginary line on the ground when people are waiting for one thing or another. :) :)