As a reminder:
[dev1035] Improvement of Targeting Modes

* Targeting Mode A (Targeting mode before the patch 1.16)

Target/Menu Navigation Keys and Corresponding Actions

o Up/Down
Target party members in order
o Left/Right
Cycle through all selectable targets

* Selecting Targeting Mode A set the Targeting Mode to "ALL."

* Targeting Mode B (Targeting mode after the patch 1.16)

Target/Menu Navigation Keys and Corresponding Actions

o Up/Down
Cycle through targeting modes
o Left/Right
Cycle through valid targets, according to the targeting mode currently selected, in order

* Selecting Targeting Mode B will disable Targeting Mode "ALL."

So, as for Targeting Mode A I would suggest what was said before, that when cycling Left/Right you would only cycle through enemies, not all selectable targets.

As for Targeting Mode B, I would suggest that the cycling through targeting modes happens by pressing a combination of two buttons (for example square + up or down). Further, pressing only Up/Down would for example target other PC's when the targeting mode is set to [Player], while Left/Right would target friendly NPC's.

But I just threw these out here, so more discussion regarding the new devtag can be discussed here.