A option to sort by disc to digital copies would be nice to add.

I think thats the best option. But would a disc copy still have the same issue as a digital copy?

I prefer to have the option of discs and digital. Have all digital is nice and all but for those times where it's cheaper to get a disc it's nice to have the option.

Unless they are from bundle sites like humblebundle.com, I still buy disc based copies of my games.

I'm going to have to activate them with Steam, Origin, etc, anyway so it's the best option. I get a nice disc (mmm, that new game smell) and once activated I get a digital copy too.

are digital copies cheaper then the disc based option on account of not paying for artwork or discs?

If you own a digital copy (on your account) and a physical copy (the disc), then you own two copies of the game. The better option would be to let your friend use your game disc while you use your digital copy on your console that you've set as your Home
Xbox, as the setting is not intended or designed to be passed around to other users.