When I use the app, I would like to order my library by rating, however all it does is put them in alphabetical order. The only game not in alphabetical order when I do this is Pathfinder: Kingmaker.

Is this a bug? If so how do I report it?

If ratings isn't meant to sort by user rating is there a way to do so?

I don't use Galaxy (which is, I assume, what you mean by "app"?), so I don't know, what wonderful extras this "completely optional" tool offers...

But the available ways to sort my (non-Galaxy) library only include:
- title
- purchase date
- tags order
- oldest first
- newest first
(plus the further (pre-subdivided) options: genre, system, language, features and tags)

So I don't think there is a way to sort your games by ratings.

Or...more precisely: I don't think there is a way to sort your games by ratings - UNLESS you invest the work and create a "rating" tag for each of them, by which you then can sort them.

But again: that's coming from a non-Galaxy user...I have no clue whether the Client doesn't offer some other way of doing, what you want.
So, take my statement with a grain of salt.