Ok weird. So when I view the file pane under the artist, I see all the tracks sorted by album and track number within albums (i.e. in the correct order) and no column headers in the file view have a sorting notation next to them. If I manually enable sort columns, the notation appears. Choosing to sort within groups, and putting "album" in the first sort position and "track #" in the second sort position the visible order of the tracks does not change at all in the file view (same grouping as before I set any columns), but when I press play the tracks are now correctly sent to playing now grouped by album and in track order, but the albums themselves are in a different order than was displayed (they are displayed in date order, but get sent alpha by album)! More interesting, if I navigate away and come back, the column headers in that file view no longer show any sorting notation, but when I press play the tracks still get sent to playing now in the last used (but invisible) sort order.
So there are two issues here, the file view isn't showing the column header sort notation by default in certain levels of category view for some reason, and the file view isn't reliably showing the results of that hidden sort, so the files are getting sent to playing now in an unexpected order. I suspect this is an issue with "grouping" in the file view, and that grouping isn't being taken into account when sending files to playing now. If I disable grouping temporarily in the file view, the displayed file order is exactly what gets sent to playing now.
In any case, for anyone seeing this issue the short term workaround is to set "sort inside groups" to default (or however you'd prefer); that still won't necessarily send the albums in the displayed order, but tracks are sent to playing now in track order by album at least.