Photo Album Index Is Out Of Order...

As an example of using folders - all my albums with vacation photos are grouped in yearly folders for easy access, and an additional layer of enclosing folders for groups of ten years. Tat makes it easy to handle more than thousand albums in the drop down lists, as the list will be a short list of folders and I have only to open the folders I want.

This problem seems to be fixed in macOS 11.2 Big Sur, but I am not sure, if your Mac can be upgraded to this system version. On my Mac the drop down list of "Add to Album" is back to normal, and exactly in the same order as in the sidebar.

On macOS Catalina I have simply stooped to use "Add to album" at all. It is quicker and easier to drag the selected photos directly to the album in the sidebar. And I al structuring the list of albums with folders. It helps a lot not to have a flat list of albums, but to collect related albums in folders and subfolders. This shortens the list of albums and we can hide complete groups of albums by closing the containing folder.