Okay - you're using the latest version of PowerPoint, so we're starting from the same point - good.
Now, I'm actually a bit behind you here... I rarely even look at this function, and I wasn't even sure of what a "hanging indent" was, much to my embarrassment. Is this supposed to be a first-line indent, like the paragraphs in a book are indented? Or is it the other way around, where the first line is flush with the margin but the rest of the lines are indented to the right of the margin?
The Office 2008 help content contains only a paucity of information on the Paragraph dialog settings - it's not enough to really understand what is meant by "hanging indent" in the first place. (I've already complained to Microsoft about this, and would hope that they add some more useful help content on this soon...)
Okay, my lack of knowledge aside, after creating a blank presentation, double-clicking on the slide to make a text box, typing in some lines, return characters and more lines, and messing with the indent and Hanging Indent settings, I'm starting to see how it could possibly work.
I selected the text box, and from the Format - Paragraph dialog, in the Indents and Spacing tab area, I selected "Before Text" as 1 cm, "Special" as hanging, and "By" as 2.02 cm. The result was that the first line remained flush with the margin (left side of the text box), while the remainder of the lines were indented.
So if "hanging indent" means "indent everything but the first line", then it seems like it's working. Since I don't know how this function is supposed to behave (due to a lack of help files), I can only speculate, however.
I found that it's easier to see the changes in the tabs when you actually select the text within the text box (not just the edges of the text box itself), and then go to Format - Paragraph. You can then make live changes to the Indentation values. I'm guessing it works, but depending on the numerical values you enter, it may appear to be messed up.
Also, I found that as with the Windows version of PowerPoint, you have to hit SHIFT+Enter in order to insert a line break (not a paragraph break). Hitting Enter alone will put a paragraph break in there. The difference is major when you're using indents.
Jeff