its a filter
and yes, I have had it not hide the parts in the graphics window. generally any time after I have used isolate already in that session with that assembly. SW2016 SP 4.0
When I had 2015, it never did that. Today it behaves as expected (as you expect) in 2016 SP3.
I could find no setting to toggle what you are experiencing.
I did find the name of what you seek, "FeatureManager tree filter". There is a (checked and grayed out) box for that option under System Options > FeatureManager which is named, "Enable FeatureManager tree filter". Try searching your options for the terms tree or filter. "Search" primarily refers to the field in the title bar, upper right, by window control icons.
I hope this helps a little.
If you want to poke at it, also consider trying a Registry wipe and reset applicable to Solidworks. There's a better thread which covers that, and I wouldn't mislead you on a task that sensitive with a mere recollection.
Mine was checked and still didn't work. Had to reboot computer.
SolidWorks 2017 SP4.1
hi my friend . i had your problem on my 2015 version of solid works and i realized that it happens when you toggle transparency of one component in you assembly file then you do it again on some component and the filter will work again.
enjoy it .