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Dear Kimberley:

Unfortunately, Lightroom flags (both 'pick' and 'reject') are internal to Lightroom catalog database. These flags are not exported to XMP files and not imported from XMP.

To sort files by capture time use 'EXIF timesamp' in Sort order pull-down menu in Sort&Filter panel:

For more details see Sorting and FIltering manual section:

Please note: if you sort files based on in-file metadata (EXIF timestamp, XMP rating), all metadata for all files in folder should be read during sorting (or filtering). This may take some time esp. if you use slow media (USB-connected flash, magnetic/mechanical HDD, common home NAS storage). This metadata reading is performed in background, but files may re-sort during metadata read.

If you preserve file date/time while transferring files to computer, it is much faster to use Modification time sort order instead of EXIF timestamp.