[Orgmode] Org Mode Searching Bug?

[Deech]

Hi all,
I have been using org mode for the past month and on the whole it's great. But I
am having trouble searching tags and sorting TODO items. 

If this is the original file:

*PROJECTS
** TODO Take out garbage                        :home:
Today is garbage + recycling 
** TODO Do the laundry                          :home:
** DONE Pay car insurance                       :bills:

Doing a 'C-c v'(to show only TODO items) also shows the DONE item, like this:

*PROJECTS
** TODO Take out garbage                        :home:
** TODO Do the laundry                          :home:
** DONE Pay car insurance                       :bills:

If I move the DONE item to the top of the list, 'C-c v' correctly shows:

*PROJECTS
** TODO Take out garbage                        :home:
** TODO Do the laundry                          :home:

A similar phenomenon occurs when I search for the tag (C-c \) 'home'. When I
query the original file, the output includes the 'bills' tag like this:

*PROJECTS
** TODO Take out garbage                        :home:
** TODO Do the laundry                          :home:
** DONE Pay car insurance                       :bills:

Similarly, if I move the headline tagged with 'bills' to the top, the search
outputs the right thing:
*PROJECTS
** TODO Take out garbage                        :home:
** TODO Do the laundry                          :home:

This is a toy example I made up, but it does the same thing on 'production' file
that I use daily. 

Any thoughts?

Thanks...
Deech