In adult respiratory distress syndrome, the primary function of pulmonary surfactant to strongly reduce the surface tension of the air-alveolar interface is impaired, resulting in diminished lung compliance, a decreased lung volume, and severe hypoxemia. Dysfunction coincides with an increased level of cholesterol in surfactant which on its own or together with other factors causes surfactant failure. In the current study, we investigated by atomic force microscopy and Kelvin-probe force microscopy how the increased level of cholesterol disrupts the assembly of an efficient film. Functional surfactant films underwent a monolayer-bilayer conversion upon contraction and resulted in a film with lipid bilayer stacks, scattered over a lipid monolayer. Large stacks were at positive electrical potential, small stacks at negative potential with respect to the surrounding monolayer areas. Dysfunctional films formed only few stacks. The surface potential of the occasional stacks was also not different from the surrounding monolayer. Based on film topology and potential distribution, we propose a mechanism for formation of stacked bilayer patches whereby the helical surfactant-associated protein SP-C becomes inserted into the bilayers with defined polarity. We discuss the functional role of the stacks as mechanically reinforcing elements and how an elevated level of cholesterol inhibits the formation of the stacks. This offers a simple biophysical explanation for surfactant inhibition in adult respiratory distress syndrome and possible targets for treatment.