I have adapted my game to use the current picking system shown below. I periodically, in the same place in the game, get incorrect results. Is there a "pick rectangle" or something that defines the area to pick within?? Basically I am on top of a more distant shape but the code is returning a nearer shape that is in the view but not where the mouse is. I am guessing that an area around the mouse is the target "pick rectangle"?? can I minimize this if that is the case to tighten the focus?? Is the BoundaryBox of the shape involved??

Well, in PickingLibrary picking there isn't any pick rectangle. It's just a mathematical ray (Ray3f), that is tested for intersection with the Group's Bounds, the Spape's Bounds and the Geometry (in that order). If the Group is not intersected, the Shape's Bounds are not tested. If the Shape's Bounds are not intersected, the Shape's Geometry will not be tested.
So far there's only BoundingSphere as a used Bounds implementation type. So it can be quite unprecise sometimes. But if the Sphere is intersected, the Shape's Geometry is anyway tested precisely. Well, maybe there are errors.
BTW: What are you using as the pick-mutex? I hope it's your VirtualUniverse instance as it should be.
Marvin