It's not a bug, it's a feature. Or so they say...
Your camera is functioning normally, it's just that for some reason, Canon decided that with a flash attached or in M mode, Auto ISO should be locked at ISO 400. You can set the ISO manually to whatever you want. If your C# settings are based on M mode, the same limitation applies.
Not that it helps, but for the 7D and subsequent cameras, Auto ISO works in M mode, so you set aperture and shutter speed, and the camera sets the ISO to achieve the metered exposure.
I'd consider it a bug... Why wouldn't they give us the OPTION to set ISO automatically in Manual? Granted, it's manual mode, but why make it available on other cameras then if it wasn't a feature some people might find useful.