If the “Use default server from VSTS options (currently ‘myserver’)” is selected, but the server from the “Use VSTS server” edit box will be used if populated. Clearing the edit box causes the default server from options to be used.
I’m not able to reproduce this here. What I am seeing is that the action title shows the server in the “Use VSTS server” field, even when Use default server is selected. Unfortunately I can’t fix that without major architecture changes due to .net plugins are done.