Very weird.
Okay, when I'm in outline view (same setup as you), it prints exactly what I
see. Indented and all. It doesn't matter whether formatting is showing or
not. It comes out wrong if I go into Print Preview, but the Quick Preview
in the File | Print dialog doesn't make a difference. The Quick Preview also
accurately shows only the list, not the full paragraphs.
I assume that's all the same for you? If not, say where different. Check if
you get different results printing to PDF instead of to the actual printer.
Just thought of something--when you say collapsed outline, do you mean
collapsed to headings only, or do you mean collapsed with headings and first
line of each paragraph? I can certainly get mine to print headings only,
but don't think print first line of each paragraph works.
Here's a wild guess--make sure that you are neither viewing or printing
Hidden Text, uncheck the boxes in the appropriate Preferences tabs. See if
that makes a difference (doesn't seem to here, but mine isn't misbehaving).
Workaround--temporarily create a Table of Contents (Insert | Index and
Tables, Table of Contents, select any template, probably want to uncheck the
box for show page numbers, set the level to the appropriate number) and
print that instead, by selecting or somesuch. Delete after printing. It's
quicker than it sounds.