I did some of investigation of this issue because I ran into the same problem when trying to convert an old project from groups to folders.
I discovered what is happening is that Xcode 16 changes the model's current version to the last one alphabetically.
I was able to reproduce it this way:
Create a brand new, folder-based, Xcode project.
Add an xcdatamodeld with one entity.
Add a new model version and name it "a".
Make it current.
Quit Xcode.
Relaunch Xcode.
Expected result: The "a" model version should still be current.
Actual result: The original model version is current.
I was able to reproduce with Xcode 16.2 and 16.4. It appears to be fixed in Xcode 26 beta 6.
Based on these steps, one workaround appears to be to name the model versions alphabetically.
Another workaround is to keep the xcdatamodeld file in a group, not a folder.
And of course if you can switch to Xcode 26, then you don't need to workarounds above.