It better to turn off VX formating feature for switch/case statements, because on moving large switch case statements, code after VX reformating looks chaotically.
first question, do you have VA's "format after paste" turned on? i assume you do from what you are saying. if you select this code and tell the IDE to format it CTRL-K, CTRL-F what happens? an initial test here in VS2005 shows that the IDE its self is not formatting the switch statement as expected.
VA does not actually do any code formatting its self, instead it tells the IDE to format the code.
unfortunately the IDE does not give you many options to fine tune its formatting of the code *sigh*
it is worth knowing that if you highlight several lines at once and press tab all of the lines are indented by one tab stop. this should help you fix this formatting problem a little more easily.