I just tested the tool using the setup as you described and it works fine for me. But looking at your image you are saying you expect a red end vertex where you have circled it green? But from your first image it's not possible to say with 100% confidence that one of the lines that you want to merge is in fact pointing in the wrong direction? You are not showing all the vertices. I would suggest reviewing your data to ensure that they are all pointing in the right direction, especially if someone else told you that was the case and didn't actually check it...

I just tested the tool using the setup as you described and it works fine for me. But looking at your image you are saying you expect a red end vertex where you have circled it green? But from your first image it's not possible to say with 100% confidence that one of the lines that you want to merge is in fact pointing in the wrong direction? You are not showing all the vertices. I would suggest reviewing your data to ensure that they are all pointing in the right direction, especially if someone else told you that was the case and didn't actually check it...

UPDATE

See video below: