This problem does not happen in Waterfox or Brave. It will keep the links separated in the proper folder.

Restoring or importing a backup always gives you the bookmarks as organized at the time the backup was created. In some cases importing an HTML backup can cause bookmarks like in the Bookmarks Toolbar folder to appear as a folder in the Bookmarks Menu folder, but restoring a JSON backup shouldn't cause issues unless there were problems with the places.sqlite database.

Note that you can only sort bookmarks in a folder via "Sort By Name" in the right-click context menu, sorting via the Views menu in the Bookmarks Manager (Library) only works for viewing purposes in the Library.

How do I correct this (places.sqlite). I have made no changes to Firefox or W10, stock setups on both? Correction about waterfox, it does it too just take longer to to happen.

I did save as html version too, well since no one can help and since chromium base browser don't have this problem (for the time being) I will have no choice to switch. See ya

In all the years I have use firefox (since 0.8) I have had many problems, AND NEVER NOT ONCE HAVE EVER GOT ANSWER TO FIX MY PROBLEMS! I have been able to fix them somehow and once again I fixed this problem. I am not sharing, I do not get paid for this this and I do not have the time to waste on this supporting this 2nd rate browser anymore. SEE YA, GLAD NOT TO BE USING firefox ANYMORE!

Sorry I didn't see your question earlier.

This problem can be caused by the "Default Bookmark Folder" add-on. During import or restore, it dutifully moves all the bookmarks to your default folder. It is essential to disable the extension before performing either of those operations.