I have "smart" indenting with an indent and tab size of 3 and "insert spaces".
I'm pretty sure that is what I've been using for a long time.
Here is another odd piece of the puzzle. I opened up an old project, made sure the settings for the Text Editor|All Languages|Tabs were those I said above. Then I tried the new line operation described, and it worked as expected.
Then I went into the new project, checked the settings, then tried there and it didn't work as expected.
I went back into the settings and noticed that "smart" was no longer checked. For some reason, it doesn't seem to be saving that setting.
So perhaps there is something wrong in the saving of the settings, not how it works when the settings are correct.
Here is the code where it is happening, in case that makes a difference:
Initialization = public class
TableNames : List<String>;
TableNames := new List<String>;
// these tables will initialize records in the target database table with values from the source tables
// other tables will not have column initialization
TableNames.Add( 'VSDS_NEXT_KEY' );
var x:= 1;