Matt --
To the best of my knowledge, Microsoft has never published the exact
algorithm that the software uses to level overallocated resources.
Essentially, the software uses a combination of five factors in the
Standard order to determine which tasks to split or delay: Predecessor,
Amount of Total Slack, Start Date, Priority, and Constraints. After 7 years
with this software, I'm still not sure which of these five factors is
considered first when using the Standard order, and like you, I can find
counter examples. If you set the leveling order to Priority, Standard then
the Priority number factor is considered first. If none of the factors
determine which tasks to move or delay, then the software uses the ID number
to make its determination.
Hope this helps.
--
Dale A. Howard [MVP]
Enterprise Project Trainer/Consultant
Denver, Colorado
http://www.msprojectexperts.com
"We wrote the book on Project Server"