Type the letter b in A1, the letter a in A2.
C1=A1
C2=A2

Now if you highlight and sort A1:A2 ascending, it is alphabetized.
Undo it if you've done this.
If you highlight and sort C1:C2 ascending, it does not sort as
desired.

This is in XL2003. I assume that you reproduce it; thanks for
reporting that you don't.
But if you do - this is shocking. In sick irony this is a case where
hope I have a corrupt file. Surely this is not by design???