If you are playing with the battle timer off then maybe that's some of your problem. I've had them stand there if they have no seige equiptment of their own, they cannot breach the walls unless they knock open one of the doors themselves. Send one unit out to route and they will follow him back thru the door. Kind of hokey but it works.

Yes there are some issues with the AI, the oddest one is the "wandering Papacy" who now sends armies out to conquer North Africa, leaving a rebel province right at his door step.