This the normal behavior of the drag & drop operation in this case. In the self-reference scenario the data is stored in one table and when the drag & drop operation is executed the parent key for the drop node is changed to the new one. The operation does not change the order of the records in the DataTable/database. In order to support this operation, the drag & drop operation must find the position of sibling node in the external source and make remove / insert operations at that position. In addition, it should update the related database to insert the record at this position. This operation can be more complex and can not be supported in many data-binding scenarios. For this reason the drag & drop operation is implemented to support the general case and change only the parent key of the DataBountItem using the relation information settings of RadTreeView.
I hope this information is useful. Let me know if you need further assistance.
All the best,
the Telerik team