You are correct sir! I do not acknowledge Apple's retro-active naming convention. If you lived it like I did, there was no "System Software" bundle-branding until System 5 came along and even then (with its System 4.x & Finder 6.0) nobody called it that until System 6 unified the individual parts. It was just "System this" and "Finder that" which were actually mixed and matched freely based on nothing more than computer folklore of the day. I share Eric Rassmusen's astute theory that some Apple development lackey was rushed trying to meet a deadline and hastily assembled that flawed chart (and the source of so much confusion in the Mac world), thinking it a good idea at the time, in order to meet a deadline for that first Develop CD. It certainly wouldn't be the first time Apple published something it shouldn't have that was not thoroughly reviewed for accuracy and logic first.
I am therefore referring to the first System version release officially known as 1.0 (but actually .97, though I'm sure it was the same team on .85 dated a month earlier as well), along with Finder 1.0 on the first published System Disk.