Writing to MemoryStream with StreamWriter returns empty

You are forgetting to flush your StreamWriter instance.

public static Stream Foo()
{
    var memStream = new MemoryStream();
    var streamWriter = new StreamWriter(memStream);

    for (int i = 0; i < 6; i++)
        streamWriter.WriteLine("TEST");

    streamWriter.Flush();                                   <-- need this
    memStream.Seek(0, SeekOrigin.Begin);
    return memStream;
}

Also note that StreamWriter is supposed to be disposed of, since it implements IDisposable, but that in turn generates another problem, it will close the underlying MemoryStream as well.

Are you sure you want to return a MemoryStream here?

I would change the code to this:

public static byte[] Foo()
{
    using (var memStream = new MemoryStream())
    using (var streamWriter = new StreamWriter(memStream))
    {
        for (int i = 0; i < 6; i++)
            streamWriter.WriteLine("TEST");

        streamWriter.Flush();
        return memStream.ToArray();
    }
}

[Test]
public void TestStreamRowCount()
{
    var bytes = Foo();

    using (var stream = new MemoryStream(bytes))
    using (var reader = new StreamReader(stream))
    {
        var collection = new List<string>();
        string input;

        while ((input = reader.ReadLine()) != null)
            collection.Add(input);

        Assert.AreEqual(6, collection.Count);
    }
}