I thought it would be:

Window (Menu) | Preferences (selection)
Java (outline choice) | Editor (choice)
Typing (tab)
uncheck 'Smart Cursor Positioning at line start and end'?

I restarted Eclipse and the answer is that it still
auto indents. Apparently that is only the behaviour of the
HOME and END keys.

Couldn't find anything under
java | code formatter
either.

But I think what it is doing is applying the templates found under:
Java | Editor | Templates
Which means you could really confuse yourself and apply different
formatting styles for different statements!

But I think that still leaves you with the behaviour where it
just aligns the cursor under the start of previous line.

HTH,
-Paul