I have similar symptoms and have asked myself the same question.

Basically the conclusion I reached is that it's not a narcissistic orientation because, covert or not, narcissists have a defensive belief which states that "I am unique, special, supremely talented and capable and just better." therefore I do not need other people.

An overt narcissist selectively focuses on the evidence that s/he IS special. Whereas a covert narcissist, lacking any evidence of their specialness, subsequently decides to at least avoid any situation that would produce evidence that s/he is not special, and thus needs people.

By avoiding those situations, the underlying belief is maintained.

Which means covert narcissists are still narcissists... fundamentally they still believe that they are special and do not need other people. They're just avoiding examining that belief too much because their intuition is telling them it could be false.

It's unthinkable for a covert narc to say "I only want to be around people who are worse than me" because that implies that they recognize there are people that are better. They do not (consciously) recognize that. If they are a narcissist then they wouldn't tolerate the thought.

In that case, the fundamental split is good self vs bad other.

Look at the borderline continuum instead... where the underlying belief is "I need people but I cannot trust them to be willing to meet my needs."

Other people are recognized as being fundamentally "like" the self, as in, on the same playing field.... so empathy is possible. However there is a split (in both self and others) between good person behaviors and bad person behaviors.

It all comes down to "under which conditions do others meet my needs?" If others meet my needs when I am sick and needy, then being sick and needy is a good person behavior. If others meet my needs when I am pretty, then being pretty is a good person behavior.

Aaaand if others meet my needs when I am better, then being better is a good person behavior (and being not better will lead to abandonment)

So you have two very different psychological profiles creating avoidance of situations in which I am not better. But the difference in the latter is that the crucial belief is not "I just AM better." Maybe the person sometimes believes they are better, but only in situations where there is actual evidence of being better (because it's not a magical, defensive belief.) Maybe the person sometimes likes being better, because who doesn't? And because being better gets my needs met. The point is they can tolerate and acknowledge the possibility of not being better.

The avoidance of people is not avoidance of not being better, but avoidance of abandonment (...if I'm not better.) And telling yourself you're better when you feel alone is a way of telling yourself "if people saw the ways that I'm better, then they would love me." It's kind of like a rescuer fantasy.

I think this comes from being the recipient of narcissistic abuse (usually from a parent) rather than being the narcissist yourself. "If I was just good enough for them (aka perfect) they would have loved me. So once I am perfect then I'll be worthy of love."

Don't know if that makes sense or if it feels like it fits for you but, that's how I figured it out for myself. Also I could be totally wrong so.