When you cross-tag your Folder/Project to an additional location (Folder/Project/Space) it automatically inherits the sharing permissions of that location. However, if you then remove that additional location it conversely does NOT remove the additional people that it had inherited it, so it now sits in their "Shared With Me" section. Our users are always overwhelmed at the mess that "Shared With Me" section becomes and our Admins are constantly cleaning it up; this issue seems to be the root cause of the mess.
If the rule is "If selective sharing is disabled on that Folder/Project it should always inherit sharing permissions from where it's tagged to." than this isn't behaving according to the rule. Please consider resolving. Thank you!