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We have fixed this bug in our latest release – v 24.2.1 which is available worldwide now. Thanks for your patience on this.
Please note that after upgrading you might still see that Align To sets itself to Align to Key Object. If you see this, please manually set the Align To to the required setting, and this reported bug will not happen again. You’ll need to this one time only.
The reason Align To might get set to Key Object after update is because Ai remembers your last Align To on subsequent launches as well. So, if your last Align To was Key Object before quitting/upgrading, after first multi-selection, it will set itself to Key Object. After you manually change it one-time, it will work fine.
You can update to the latest release using Creative Cloud desktop App: https://helpx.adobe.com/in/creative-cloud/help/creative-cloud-updates.html
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I recently updated Illustrator as had read this would fix this problem... nope still happening!! drives me insane.