Ok, as usual after posting I come up with new search words and find an answer.
Seems that AdjustAlignment() only works if the database its in is the Working Database. So adding,
db.ReadDwgFile(filename, FileShare.ReadWrite, false, null);
using (Transaction tr = db.TransactionManager.StartTransaction());
{
Database oldDB = HostApplicationServices.WorkingDatabase;
HostApplicationServices.WorkingDatabase = db;
...
foreach (ObjectId oid in bref.AttributeCollection)
{
AttributeReference aref = tr.GetObject(oid, OpenMode.ForWrite) as AttributeReference;
aref.TextString = newText;
aref.AdjustAlignment(db); <--- Added this line from post found on The Swamp but still not working
}
tr.Commit();
HostApplicationServices.WorkingDatabase = oldDB;
}
db.SaveAs(filename, flase, DwgVersion.Newest, null);
Fixes the problem. I continue to be confused by this API. As I type this I see kaefer has responded. Thanks kaefer!