I don't get the described behavior in gnu-emacs. Must be an xemacs thing. ... Actually, I just noticed that in this case M-q does manage to do the 'right thing' with the parenthesis. Try that.

That was probably meant for the list. I don't have a problem with SLIME's handling of parentheses, the OP has. Cheers, Edi. Sorry, Edi, I thought I was mailing this to the list. -Jeff