I then tried doing this with a road just after building it and the same weird curvy road was the result. If I delete road sections from the weird curvy road, it adjusts correctly when I hit rebuild again.
Am I missing some simple but essential step when running the rebuild tool?
Ahh... a lovely winding road. Just needs some minor adjustment because I moved the piece next to the bridge a couple of feet:

Okey dokey. Select the road in road tool, hit rebuild, and... OH NO! What has happened?

If you are from the Northwestern United States you may have noticed that this map is based on the Mt. St. Helens area. Here's a wide-angle shot taken above Spirit Lake. The sun is about to set behind Harry's Ridge:
