WORKAROUND 1: Try selecting 'Objects | Autolayout'
WORKAROUND 2: Setting the 'Horizontal Distance Coefficient' and 'Vertical Distance Coefficient' (from Setting | Options | Graphics) - These controlled the relative horizontal and vertical distance between entities in a model. The higher the number, the larger the distance between entities. You'll have to re-engineer the model again for the option to take effect.
WORKAROUND 3: Using the Alphabetic Autolayout from 'Marcos | All | Alphabetic Autolayout)' - The 'Number of Columns' is the number of entities you what to line up per row. You can either sort by 'Caption' or 'Name.'
WORKAROUND 4: Creating workspaces (or sub-models) based on the recommendation from the help contents of TDM on dealing with large models – This suggestion does not deal with auto alignment but rather a possible way to help organize larger models with the help of sub-models. Please consult 'Help | Help Topics | Search' with keyword "large model."
WORKAROUND 5: If the above suggestion does not work the model will have to be aligned manually.
STATUS: Enhancement request has been submitted to Development for consideration in a future release of Toad for Data Modeler.