Oh! THAT skirmish mode... I thought there was some arcane and mysterious "skirmish mode" something similar to arcade mode (where you have infinite arrows) - please don't read this as a sarcastic post, I am being sincere.
Anyway, that skirmish mode is not really related to this issue.
So, Waywardryan, Omanes and me are in agreement. You should be able to set your formations before the battle if you are defending a settlement assault from INSIDE the settlement. If you are doing the sieging and the enemy decides to run out of their settlement to attack you, then you can't.
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