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Currently in 4.2.2 (build 2), If I set the solution code formatting policy to "Custom", then set Tab width and Indent width to 2 and tick the box for "Convert Tab to spaces", I can see the project level settings which are "inherited" show my correct settings, however in the actual c# code none of it works.
Pressing tab still tabs and doesnt go 2 with space indent
Should be fixed in master
*** This bug has been marked as a duplicate of bug 15962 ***