Set tags "tag1 tag2 tag3" to an asset.
Save the assets and enable "Enable Tag Filtering" in Project Explorer.
You can see the tags.

Change the Project Explorer to "Repository View" mode.
There is only the tag "Drools". It does filter something out, but looks like it has nothing to do with the tags I set.

Change back to "Project View" in Project Explorer. You still have only the "Drools" tag and the UI in the PE is a mix between views. If you move back to "Repository View" you get the "Unable to complete your request. The following exception occurred: null." popup.

After refreshing the browser the tags filter dropdown is empty. Opening an asset that has one of the tags helps to refresh it.