I spent a good time playing with your VI and have confirmed the behavior mentioned. I then opened that VI in 8.5, and it works great.
So I've been digging, and I think I've found it.
There was a bug report submitted to R&D about this (CAR 3ERBR99A). It was fixed in LabVIEW 8.0. One work around (although not as elegant) would be to place a control next to your XY Graph that was linked to the
Scale Fit property. Unfortunately that is the best work around we have without an upgrade to 8.5.
David_B
Applications Engineer
National Instruments