ArcGIS 10.2.1 for Desktop.
The domains were originally created in a 9.3 SDE and we recently upgraded to 10.2.1.
The gdb I am working on was created from a map package using feature classes from the 10.2.1 SDE so I am not connected to our SDE when I am trying to reorder the domains.
I hope I answered your questions correctly, I am relatively new to SDE.
I did create a dummy file geodatabase, created a domain, added three values and attempted to reorder the domain and I got the same error if that helps (I also tried the same thing using a personal gdb).
Thank you!!!