I\'m writing an app in .net that uses the autoscroll for a layout panel in a dialog. It seems that whenever I resize the window so that the vertical scrollbars should appear
Yes, I think you already diagnosed the problem correctly. It is a nasty side effect of, say, the vertical scrollbar appearing and needing space, making the available client area smaller. Too small to fit the controls, now also making the horizontal scrollbar appear. It is actually bi-stable, the horizontal bar can flicker on and off in certain cases.
To avoid this effect, the layout engine would have to make multiple passes through the layout, dealing with the changing client area. It however only makes one pass. Which sounds wise, this could be a potentially never ending loop. I don't know of a decent fix for this. Your user will probably just resize the window large enough to get rid of at least one of the scrollbars.