Difficult to provide a screencast right now, but here are steps to reproduce the issue in the simplest and easiest manner:
1. Fresh install of VLC, no videos. Group videos by name is enabled by default I think. Under Settings > Interface make sure Video Playlist Mode is turned OFF first for testing.
2. Add just 4 videos, can be the same file copied 4 times. "File 1.mp4", "File 2a.mp4", "File 2b.mp4" and "File 3.mp4".
3. Play "File 1.mp4", correct file plays. Play "File 3.mp4", correct file plays again (can see file name during playback on touching the screen.)
4. Now important, turn ON Video Playlist Mode.
5. Play "File 1.mp4", correct file plays. But now play "File 3.mp4", and instead WRONG file "File 2b.mp4" plays! Why? Because with Video Playlist Mode on VLC stupidly counts INSIDE groups, so when THIRD file from beginning is to be played:
Position 1) File 1
Position 2) Group of File 2 (entire group should be ONE position)
Position 3) File 3 ---> To be played
Instead it counts wrongly INSIDE groups and plays wrong file in position 3:
Position 1) File 1
Position 2) File 2a
Position 3) File 2b ---> Wrong file played!
Position 4) File 3 ---> To be played
More the files in any group, obviously more the position will be wrong when attempting to play any files
after the group.
Really, this bug is so, so very obvious that I can't see how it can escape observation!