The above is correct...they supposedly make a rough plan about 2 weeks in advance. I know this isn't a final version because each time I've done a B2B cruise, I've been contacted toward the end of the first leg asking if I had any dining requests for the second leg (specific rotation/servers/seated alone or with others, etc).
You find out your assigned dining rotation when you get your KTTW card. If for some reason you are unhappy with that, you can go to "dining changes" after boarding to see whether you can be moved to something you'd like better.
Many people like to know their rotation before choosing a Palo night--this is not possible. However, after boarding it is possible to move either the Palo or the rotation if space is available. I'm with the above poster--it is not a big deal to eat in Lumiere's on formal night. It's nice, but it doesn't make or break the cruise, and only 1/3 of the guests can be in this situation!