After some testing I've noticed that the "Sort Categories" option in the widget settings actually doesn't affect the frontend output if the order is set to "Ascending". The same applies even if using the "My Category Order" plugin.
orderby: ID + order: ascending => sort by name/slug (alphabetical ASC);
orderby: ID + order: descending => sort by ID (DESC);
orderby: term order + order: ascending => sort by name/slug (alphabetical ASC);
orderby: term order + order: descending => sort by term order (DESC);
can you please confirm the bug and maybe fix it or suggest a workaround?