In 12.1-Beta2 (not sure about Beta1 and other versions since 12.0.2-Beta7 because I wasn't able to use those due to other bugs they had), Alt-Tab started to select random windows and seems to be prioritizing some of them or going through all windows instead of going back and forth between the latest 2.

Example1:
1. have 5 Firefox windows open
2. select at least 3 of them one after another, now window5 is open
3. try to use alt-tab to switch back to window4
4. either some other Firefox window (window1, window2 or window3) or some other program will be selected

Example2:
1. have 2 applications open, can be anything
2. have Discord open and minimize it
2. activate app1
3. activate app2
4. try to tab back to app1
5. Discord will be selected instead

Can't find any pattern in it, it seems some apps are being prioritized (like Discord), minimizing them also plays a factor somehow, sometimes it seems like it will just go over all the windows in some random order instead of back and forth between the last 2 used.

I'm not sure which one is relevant here, these are the settings I could find (I'm on 12.0.2-Beta7 right now but I believe these settings carry over upon updating/downgrading, at least I haven't changed any settings and it still works with this version).

I have the same problem. alt+tab is not switching to last active window anymore. Beta1 worked fine.
Win10 Pro, Steam Version of DF, Alt+Tab-Setting is "on active screen all opened windows"
if I deactivate it, te windows-alt-tab-switcher works correct.
main-screen or all-screens and all opened windows => same problem
on current screen only windows from this screen => same problem

I have tried Beta3 that says there's some fix for Alt-Tab behavior but I can't see any change. Does all the same things as before.

Debug log attached. Issue reproduced multiple times at 17:49.

I have tried the new version and it's still not ok.
In some cases I can select 2 windows and go back and forth between them but as soon as I select something else (by clicking on its titlebar, taskbar icon or inside the window), it goes back to something else.

Example:
display 2: Notepad (UWP), Firefox1
display 3: Firefox2

1. select Firefox1
2. select Firefox2
3. alt+tab between them - OK
4. Firefox2 is selected, select Notepad
5. alt+tab goes to Firefox1 instead of Firefox2

I don't know how the type of app, the method of selection or their position on different displays matters, it feels like they do but I can't find a definite pattern, still feels somewhat random.

Yeah, this version looks better but still not OK

It looks like there is a problem if you focus to one window with the mouse

window1 => alt tab to window2 => alt tab between this works
also between win1+win2+win3 works

if you disturb this with a focus by mouseclick, it has problems (select third, sometimes fourth window with first alt+tab-press)