I'm not sure that's the case. I've got mine set to 0 as I usually don't want to select 2 or more entities at once when I pick only one. And I have not found this problem.
BTW Micheal, was the original hatch made using pick-points? Or select objects? If the former, that may be the issue as pick-points actually selects everything visible on the screen, not just the entity(ies) forming the boundary(ies). Thus modifying anything else may also cause hatch problems, not to mention that stupid question about "You've selected ###### entities ... Are you sure you want to do this?"
And then just a shot in the dark
. What's the state of the layer on which the hatch resides? Locked / Frozen / Off? It "shouldn't" cause problems with associative hatches, but you never know.