Hi Ian,

 >Do you have the same issue if you aren't using a session?

If I run the following code block (this time I am using python 3, so
there are parens in the print line)

#+begin_src python
def foobar():
     for i in range(5):
         pass
     print("hello world")
     return 3

return foobar()
#+end_src

I get

#+RESULTS:
: 3

so I know it worked fine.

But if I add session like this:

#+begin_src python :session bug_report
def foobar():
     for i in range(5):
         pass
     print("hello world")
     return 3

return foobar()
#+end_src

then in *bug_report* I get

 >>> def foobar():
...     for i in range(5):
...         pass
...
 >>>     print("hello world")
   File "<stdin>", line 1
     print("hello world")
     ^
IndentationError: unexpected indent
     return 3
 >>>
   File "<stdin>", line 1
     return 3
     ^
IndentationError: unexpected indent
 >>> return foobar()
 >>>
   File "<stdin>", line 1
SyntaxError: 'return' outside function
 >>> open('/tmp/babel-D0mRnD/python-CJ6UtT', 'w').write(str(_))
 >>>
20
 >>>
 >>> 'org_babel_python_eoe'
 >>> 'org_babel_python_eoe'
 >>>

 >Are you using tabs or spaces?

I used spaces. 4 spaces per indentation level, to be exact.

Also, FYI, as it might be relevant information, the shell buffer
contents I posted above happen if the session has been created
previously. If, instead, this is the first time I run some code in this
session, then I also get another error - NameError (see below). Below
you can see the contents of *bug_report* buffer if I run this code cell
in a not-yet-existing session.

def foobar():
Python 3.8.2 | packaged by conda-forge | (default, Mar  5 2020, 17:11:00)
[GCC 7.3.0] on linux
Type "help", "copyright", "credits" or "license" for more information.
 >>> ...     for i in range(5):
...         pass
...
 >>>     print("hello world")
   File "<stdin>", line 1
     print("hello world")
     ^
IndentationError: unexpected indent    return 3

 >>>
   File "<stdin>", line 1
     return 3
     ^
IndentationError: unexpected indent
 >>> return foobar()
 >>>
   File "<stdin>", line 1
SyntaxError: 'return' outside function
 >>> open('/tmp/babel-D0mRnD/python-MsDjEk', 'w').write(str(_))
 >>>
Traceback (most recent call last):
   File "<stdin>", line 1, in <module>
NameError: name '_' is not defined
 >>>
 >>> 'org_babel_python_eoe'
 >>> 'org_babel_python_eoe'
 >>>

If you have a suggestion on how to debug this, feel free to tell.