"Find duplicate passwords" triggers on "{TIMEOTP}"

This is the expected behavior (not a bug). You are probably seeing something like the attached screenshot where all the entries containing the {TIMETOTP} placeholder are grouped together. This occurs because the {TIMETOTP} placeholder is special, it is not dereferenced until it is used (needed). To avoid this issue don't place this placeholder in an entry's password field. If you have a use case that requires that you add this placeholder to an entry's Password field please describe it.

Generally, it is unnecessary to add the {TIMETOP} placeholder to an entry's password field. KeePass provides several ways to use the TOTP generated by an entry containing a TOTP secret.

1. Copy it using Copy-Time based OTP option (Ctrl+T) in the 'Other Data►' sub-menu of the entry's context menu (or from the main Entry menu) .
2. Auto-Type it using a global auto-type sequence sequence defined in the entry.
3. Enable the 'Show additional auto-type menu commands' option in Tools>Options…>Interface (1) [tab]>Main Window [section]. Then use the {TIMETOP} item in the newly surfaced Perform Auto-Type sub-menu. This sub-menu can be accessed either from the entry's context menu or the main KeePass 'Entry' menu.

By running the duplicate check the user has asked whether the values in the Password field are duplicates. However KeePass can't easily make that determination for the particular case where the password field contains the {TIMEOTP} placeholder. By returning these entries as a single group, the user is alerted to a group of entries that may contain duplicates. The user can choose to disregard the result or investigate further, based on their personal knowledge of circumstances.