To reproduce:
1. Open attached Unity project "TestBeta.zip"
2. Click on "Untitled" model
3. In the Inspector window, click on Materials tab
4. Open up _defaultMat asset selection window
5. Choose any material in the pop-up window and close it
6. Open up the asset selection window again

Result: the pop-up window is filled with random assets like primitive objects, shaders and 2d sprites. Selecting one of them makes the selected material "None (Material)"
(see user's attached video for complete reproduction steps and results)

Reproduced on: 2017.3.0b3, 2017.3.0b10, 2018.1.0a5

Note: in 2017.2 and 2017.3.0a1 through 2017.3.0a4 choosing any asset in the selection menu prompts "AssetImporter is referencing an asset from the previous import.
This should not happen."

Note: in 2017.3.0b1 and 2017.3.0b2 choosing any asset and closing the window prompts NullReferenceException error when trying to prompt the window again.