1. I have 2 sequences in my test folder, one call AHDR-DNG and another one called Test.
2. I am current working on AHDR-DNG and have just loaded the sequence in to LRT
3. The preview window shows the first image of the sequence as expected
4. If I move the mouse below this sequence and anywhere in the folder pane, it shows the sequence preview with a label Test

I would expect this to occur if I was moving the mouse within a few pixels of the Test folder but not 100s of pixels away or where there are no folders

You are right. Currently hovering over the empty space below the folders will show the preview for the bottommost sequence. Will see to fix this.

Fixed in Beta 9.