In the admin, you have an “order” option, you can also drag&drop categories to get it in the right order, however in the layered navigation, it doesn’t seems to be take in account, the order is different.
I found Mage_Category_Helper_Category::getStoreCategories() helper method which seems to load categories, but I’ve not found any order option.
Any ideas?
The drag and drop function should indeed be working… I’ve got a dozen of Magento stores, and they all do the same…
Look for updates on your modules or system. Maybe there is something wrong or out-of-date.