I have a .db file from CN 1.5.3. If I put it into 1.5.4 directory (I use portable version), and run CN, Modified and Created sort modes display the same note order, both straight and reversed. This looks correct, since there was no "last modified" information in 1.5.3's .db, and the sorting uses creation date in absense of last modified date.
The same behavior is present if I import an xml dump of 1.5.3's .db into a clean 1.5.4 CN.
I think the problem is somewhere in the import logic, it is probably consuming items in some order from the source, and sets wrong last modified date. Just a guess.
I suggest the correct behavior is when Modified sorting uses creation date if modified date is absent, in any conditions.
Customer support service by UserEcho