I simply solved it with the indent() function:

xml.etree.ElementTree.indent(tree, space=" ", level=0) Appends whitespace to the subtree to indent the tree visually. This can be used to generate pretty-printed XML output. tree can be an Element or ElementTree. space is the whitespace string that will be inserted for each indentation level, two space characters by default. For indenting partial subtrees inside of an already indented tree, pass the initial indentation level as level.

tree = ET.ElementTree(root)
ET.indent(tree, space="\t", level=0)
tree.write(file_name, encoding="utf-8")

Note, the indent() function was added in Python 3.9.

import xml.dom.minidom

dom = xml.dom.minidom.parse(xml_fname) # or xml.dom.minidom.parseString(xml_string)
pretty_xml_as_string = dom.toprettyxml()

UPDATE 2022 - python 3.9 and later versions

For python 3.9 and later versions the standard library includes xml.etree.ElementTree.indent:

Example:

import xml.etree.ElementTree as ET

root = ET.fromstring("""<fruits><fruit>banana</fruit><fruit>apple</fruit></fruits>""")
tree = ET.ElementTree(root)
    
ET.indent(tree, '  ')
# writing xml
tree.write("example.xml", encoding="utf-8", xml_declaration=True)

Thanks Michał Krzywański for this update!

BEFORE python 3.9

I found a new way to avoid new libraries and reparsing the xml. You just need to pass your root element to this function (see below explanation):

def indent(elem, level=0):
    i = "\n" + level*"  "
    if len(elem):
        if not elem.text or not elem.text.strip():
            elem.text = i + "  "
        if not elem.tail or not elem.tail.strip():
            elem.tail = i
        for elem in elem:
            indent(elem, level+1)
        if not elem.tail or not elem.tail.strip():
            elem.tail = i
    else:
        if level and (not elem.tail or not elem.tail.strip()):
            elem.tail = i

There is an attribute named "tail" on xml.etree.ElementTree.Element instances. This attribute can set an string after a node:

"<a>text</a>tail"

I found a link from 2004 telling about an Element Library Functions that uses this "tail" to indent an element.

Example:

# added triple quotes
root = ET.fromstring("""<fruits><fruit>banana</fruit><fruit>apple</fruit></fruits>""")
tree = ET.ElementTree(root)
    
indent(root)
# writing xml
tree.write("example.xml", encoding="utf-8", xml_declaration=True)

Result on "example.xml":

<?xml version='1.0' encoding='utf-8'?>
<fruits>
    <fruit>banana</fruit>
    <fruit>apple</fruit>
</fruits>

As of Python 3.9, a new method named indent() has been added to xml.etree.ElementTree, which can be used to generate pretty-printed XML output without using another module or library.

To fix your example in Python 3.9+, just add the following line right before writing the tree to the file:

    ET.indent(tree, '    ')

You can do something like this:

from lxml import etree
import copy

client = etree.Element("Client")

client.append(etree.Element("ClientID"))
client[0].text = "12345"

client.append(etree.Element("ClientProfile"))
client[1].append(etree.Element("User"))

client[1][0].append(etree.Element("FirstName"))
client[1][0][0].text = "John"

client[1][0].append(etree.Element("LastName"))
client[1][0][1].text = "Doe"

client[1][0].append(etree.Element("AccountName"))
client[1][0][2].text = "Acme Inc"

client[1][0].append(etree.Element("EmailAddress"))
client[1][0][3].text = "[email protected]"

client.append(etree.Element("SalesMetric"))
client[2].text = "12345"

db_dump = etree.Element("DbDump")
version = etree.SubElement(db_dump, "ModelVersion")

db_dump.append(client)
client2 = copy.deepcopy(client)
db_dump.append(client2)
#etree.indent(db_dump, space="    ")
etree.dump(db_dump)

tree = etree.ElementTree(db_dump)
tree.write("output.xml", pretty_print=True, xml_declaration=True, encoding="utf-8")

Output:

<?xml version='1.0' encoding='UTF-8'?>
<DbDump>
  <ModelVersion/>
  <Client>
    <ClientID>12345</ClientID>
    <ClientProfile>
      <User>
        <FirstName>John</FirstName>
        <LastName>Doe</LastName>
        <AccountName>Acme Inc</AccountName>
        <EmailAddress>[email protected]</EmailAddress>
      </User>
    </ClientProfile>
    <SalesMetric>12345</SalesMetric>
  </Client>
  <Client>
    <ClientID>12345</ClientID>
    <ClientProfile>
      <User>
        <FirstName>John</FirstName>
        <LastName>Doe</LastName>
        <AccountName>Acme Inc</AccountName>
        <EmailAddress>[email protected]</EmailAddress>
      </User>
    </ClientProfile>
    <SalesMetric>12345</SalesMetric>
  </Client>
</DbDump>

I'm assuming the problem you're facing is a printing issue. Here's a code snippet using the minidom module, which automatically parses your xml in the desired format:

import xml.etree.ElementTree as ET
import xml.dom.minidom

parent_file_path = 'files/49473329.xml'
parent_tree = ET.parse(parent_file_path)
parent = parent_tree.getroot()
xmlstr = xml.dom.minidom.parseString(ET.tostring(parent)).toprettyxml()
print xmlstr

Where 'files/49473329.xml' is your mis-parsed file:

<data>
    <country name="Liechtenstein">
        <rank>1</rank>
        <year>2008</year>
        <gdppc>141100</gdppc>
        <neighbor direction="E" name="Austria" />
        <neighbor direction="W" name="Switzerland" />
    </country>
<usertype id="99999">
    <role name="admin" />
</usertype></data>

Hope this helps