Since I didnt get a response on this issue, I logged a case with Baan Support.
As many search this forum for answers, I want to record what the solution to this issue was.
After the Initial response from support and after the typical Q&A session, we opened an assist session where Baan did many checks at the table level. After about an hour of this, we could not find anything wrong with the data. At that time, we agreed to place things on hold so that he could go back into the scripts and try to find where the error was being triggered.
He called me back the next day and asked for another assist session. It was then that we discovered the problem that resulted in the error.
We were in the process of turning off QMS. As it turned out the Quality Combination was removed via session tcqms0111m000 prior to the shop orders being closed for that item. The error was very misleading. It was not inspection status that was the issue. It was simply missing the expected Quality Combination for that item.
To fix things, we had to add back the Quality Combination so that the current shop order could be closed. After closing the Shop Orders effected, we then removed the Quality Combination to prevent QMS on future Orders for those items.