Hey there,
I am really sorry for the delay of this reply as it is a public holiday for us here.
Thanks for reported, I can replicate this in my locally, i will log into issue tracker.
For now, you can put this following language translation into your site language .ini file
JoomlaFolder/language/en-GB/en-GB.com_easyblog.ini
COM_EASYBLOG_SH404_ROUTER_DASHBOARD_LAYOUT_FAVOURITES="Favourites"
Then go to your site backend > SH404SEF > SEF URLs > search for 'yblog_sh404_router_dashboard_layout_favourites' > select it and click delete with duplicate button (screenshot :
http://take.ms/k3vb4) .
After you deleted, you have to access your site frontend Easyblog listing page first then only click on that 'Favourite' link from the toolbar dropdown, then it will regenerate the correct SEF link for this page.