The old behavior, where the most recently selected entry in a sequential playlist was tracked globally instead of on a per event instance basis, was a longstanding bug. This bug was fixed in FMOD Studio version 1.10.00; sequential playlists now track their most recently selected entries on a per-event basis.
The intended function of sequential playlists is to allow the creation of events that reliably play audio files in a predictable sequences. The old behavior did not fulfill that purpose, as which entry of a sequential playlist would play next always depended on the current and past state of every other instance of the event containing the instrument in the ongoing game or studio session.
Making the selection behavior of sequential playlists specific to the event instance allows sequential playback to function as intended.