It only repeats all the songs in the directory.
This *is* working properly. Rockbox is playlist-oriented, so "repeat all" will repeat all -- files in the playlist, not in the player. Which, in case of a directory, is most likely the auto-generated dynamic playlist containing all files in the current directory. Rockbox does not maintain a list of files on your player when playing. It maintains a playlist.
Create a playlist containing all tracks on your player. Check the manual for playlists and dynamic playlist.