I haven't been keeping my version of slime current (dates from 2005-02-02), so apologies if this has already been fixed.
For the following example (and others constructed in a similar way), the C-u M-q formatting doesn't always work, namely when the curser is on the second line of the documentation string.
(defun foo () "Start with a newline. Then add some random filler text. Next comes a semi-colon; and something else.")
That is, instead of producing:
(defun foo () "Start with a newline. Then add some random filler text. Next comes a semi-colon; and something else.")
we instead get
(defun foo () "Start with a newline. Then add some random filler text. Next comes a semi-colon; and ; something ; else.")
Experimenting a little, the formatting seems to work correctly when it is the first line of the documentation string that is over-long, and will otherwise screw up when the cursor is on the same line as an over-long one that also has a semi-colon.
Cheers,
Iain