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I suspect that the behaviour may actually be correct, but is not what you would expect the option to do. I guess that the Date Added property is not a property stored by the filesystem (the fact that you can't display the Date Added in the Finder columns also suggests this), but by the Dock and consequently is lost when the folder is removed from the Dock. When you restore the folder to the dock, it will recreate the Date Added value for each file, with the result that all files have the same timestamp. Then it needs a tie breaker for the sorting, which happens to be the modification time.
Even though this might explain the behaviour, I still argue that it is wrong, as it is not what you would expect, especially not when you accidently removed the Downloads folder, restored it and then found out that the sort order is completely different.
Sort by 'Date Added' in Dock behaves unexpectedly
Wrote on March 14, 2010, 2:31pm
I suspect that the behaviour may actually be correct, but is not what you would expect the option to do. I guess that the Date Added property is not a property stored by the filesystem (the fact that you can't display the Date Added in the Finder columns also suggests this), but by the Dock and consequently is lost when the folder is removed from the Dock. When you restore the folder to the dock, it will recreate the Date Added value for each file, with the result that all files have the same timestamp. Then it needs a tie breaker for the sorting, which happens to be the modification time.
Even though this might explain the behaviour, I still argue that it is wrong, as it is not what you would expect, especially not when you accidently removed the Downloads folder, restored it and then found out that the sort order is completely different.