I've setup a list type to show some categories. As the language on the site is Norwegian, we also use ÆØÅ as characters in our language. But these are sorted at the very end of the alphabet. Ø, which should be behind T is sorted as O.
If your server supports it, Seblod tables should be converted to utf8mb4_unicode_ci collation after 3.8.4 upgrade, which resolves most sorting issues. So check encoding and colaltion set on your Seblod databse tables.
try changing it to specific collation relevant to your language (if there is any). Take a note that you need to do this on all #__cck tables and also on object's core table, in your case this is #__categories. To see exactly which table is sed for ordering you can enable debugging in searc&list to see query produced by it - see ORDER BY part at the end
It should have been sorted correctly by the database, so I'm afraid I ran out of suggestions You can try running the same query as Seblod does (the one output by debugging) and see if it correctly ordered when run directly from database.