Actually, this behavior is expected. The row gets highlighted in both cases - when you select or hover a row. The row will remain highlighted if the mouse is over it even if you navigate using the keyboard. Please take a look at this video. You can edit the TreeListViewRow template with Blend in order to remove the unneeded states or change the selected and the mouse over colours . Please take a look at this article for a reference.
Let me know in case you have any other questions.
All the best,
the Telerik team
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