I have one strange problem I already mentioned here before. At that time it was just specific to aspx files, now I whitness the same problem in my web.config.
i have setup a new test system since then, and now have IIS working, thankfully. using a C# personal website "project" i created in VS2005 with VA 1438 running there is a "web.config" file. typing the same block of XML as shown in your movie i get the correct suggestion which is accepted and inserted perfectly with VA enabled.
after upgrading the machine to VA 1440 and using the same project the suggestions and inserting of the selected text still works perfectly with VA enabled.
which type of project are you using? which version of the IDE (it looks just like 2005) and VA are you using?
I use a web project (asp.net 2.0) VS 2005 VA_X.dll file version 10.2.1438.0 built 2005.12.16
VAssistX VA.NET 7.1: VAOpsWin.dll version 1.3.1.9 VATE.dll version 1.0.4.11 DevEnv.exe version 8.0.50727.42 msenv.dll version 8.0.50727.42 Font: Courier New 13(Pixels) Comctl32.dll version 6.0.2900.2180 WindowsNT 5.1 Build 2600 Service Pack 2 2 processors
Platform: Win32 Stable Includes: c:\\programme\\microsoft visual studio .net 2003\\sdk\\v1.1\\include;
Library Includes: c:\\programme\\microsoft visual studio .net 2003\\sdk\\v1.1\\include;
using VS2005 and VA 1440 i have just created a new website of type "ASP.NET Web Site" with the language set to "Visual Basic".
opening the "web.config" file in the IDE i still cannot reproduce this problem. the only obvious difference is that when i create a new project and open this file there is already quite a lot of text in it, while i am seeing a fair bit of white space in your movie. i am wondering if the initial content of the file could somehow be relevant.
do you have the time to try creating a new website of the same type as me and see if you can reproduce the problem? the other thing to try is upgrading to VA 1440 and see if that makes a difference.