It's working exactly as designed. See post
#66 just above. vbulletin doesn't store the time a member reads a thread. Paul made a great addition to his original hack by checking which posts a member read, and posting the time of the last read post when you hover over their name. Heck, even the text in your screenshot says "time of last read post", not "time they read the last post". This time is useful, because you can see which posts a member had read at the time they last visited the thread.