I don't know if you've got a problem but all I have to do is click on "name" at the top after clicking "manage bookmarks" and it puts them in alphabetical order
I downloaded the All-In-One Sidebar and you can rearrange bookmarks as you please from the bookmarks section (by cutting and pasting)
Here's the latest version:
https://addons.mozilla.org/firefox/1027/
I just tried it on mine. If I right-click on a folder and choose Sort by name, it sorts the folders. To sort the entries within a folder, I have to right-click and entry (any entry) and choose Sort by name. I'm just off to check out SarCaustic's link...
Well, adding the All-in-one sidebar didn't make any difference to the sorting behaviour, and, at first glance, it's difficult to see any other benefits from installing it!
You can arrange individual bookmarks in whichever fashion you please with the All-in-one sidebar rojash - just right click on each individual link and cut it, then paste it where you want.