A minimal working example of an alphabetically sorted bibliography (compatible with bibtex) that stops working once the babel package is included.

bib.lco

\ProvidesFile{bib.lco}
% 
% Provide a bibliography for letters that is numbered alphabetically.
% This file is in the public domain and it can be included in letters 
% written in the scrlttr2-class by stating it as an option. See 
% `letter class options` in the KOMA guide.
%
% Some of the following is taken from
% http://tex.stackexchange.com/questions/18033/using-bibtex-with-letter-class
% but see also 
% http://tex.stackexchange.com/questions/213453/custom-thebibliography-with-alphabetic-numbering-for-scrltt2-not-working-in-pre
% and
% http://bjoernstechblog.rueffer.info/posts/latex/letters/bibliography/2014/11/23/Alphabetically-numbered-references-in-latex-letters/
% for more discussions.

\makeatletter
\newenvironment{thebibliography}[1]
{\list{\@biblabel{\@Alph\c@enumiv}}%  LATIN LETTERS AS REFERENCES
  {\settowidth\labelwidth{\@biblabel{#1}}%
    \leftmargin\labelwidth
    \advance\leftmargin\labelsep
    \usecounter{enumiv}%
    \let\p@enumiv\@empty
    \renewcommand\theenumiv{\@Alph\c@enumiv}}% SAME HERE
  \sloppy
  \clubpenalty4000
  \@clubpenalty \clubpenalty
  \widowpenalty4000%
  \sfcode`\.\@m}
{\def\@noitemerr
  {\@latex@warning{Empty `thebibliography' environment}}%
  \endlist}
\newcommand\newblock{\hskip .11em\@plus.33em\@minus.07em}
\let\bibsection\relax
\def\section*#1{\relax}
\def\@cite@ofmt#1{\def\@safe@activesfalse{}%
  \hbox{\@Alph{#1}}}
\makeatother