Thanks for the input Tony, but not what I am seeing here unfortunately. I have just experimented with some 'named' files and it makes no difference. The fact that the files are named as incremental numbered .mts files from my camcorder shouldn't really make any difference.
I just added a named .jpg grabbed frame to the end of my timeline. When I right-click on it on the timeline and select 'Find In Library' the Compact Library jumps to the beginning of my assets, miles away from where the .jpg is actually located!
Saby says this is a known bug so I will have to live with it.
In Jeff's book PS16 Revealed (which I have found extremely useful during my painful transition from PS14 to PS16), it states on pg. 47....
"Firstly, you may need to find the Source video in the Compact Library again - chances are it is still on display, but if it isn't use the right-click context menu on any of the clips on the timeline and select 'Find In Library'. Whatever was displayed in the Library before will be replaced with an All Media tab, scrolled to the clip we are using and with that clip highlighted. Neat trick, I think."
Not Jeff's fault. It's a bug. But I wasn't aware of this shortcoming in the software and thought I had corrupted something, hence my request for help.