Same issue. Targetmode B set to "enemy" allows me to target both party members, and NPCs. I accidentally quit behest earlier today while set to "enemy" because of this. Likewise, when set to "Friendly" you can target enemies.

Targetmode A (i play with a controler) when set to Enemy or Friendly does the same exact thing. I like the new addition to Target Mode A, with the inability of up and down button to change your target mode. But good god, fix the fact that you can target things you aren't supposed to!