I have made the change in the /gift/format.php file. Then when I go in and check a question, the case sensitivity drop down still says "NO, case is unimportant." Does this mean it is not working? Should it be changed to "Yes, case must match."
@Kim, changing $question->usecase = 0; to $question->usecase = 1 in your moodle/question/format/gift/format.php file will only work for new imports of short answer questions in GIFT files, not for questions you imported before you made the change to your moodle/question/format/gift/format.php file.
This is how it originally looked in the format.php file when I first opened it //$question->usecase = 0; // Ignore case
After removing the // in front of the "$question", it worked. I had just over looked that. So now it looks like this and works!
$question->usecase = 1; // Ignore case