Code requires that all current-carrying conductors be contained within the same raceway/cable. But the intent of the requirement is that the same current flowing towards the load also returns from the load within the same raceway/cable so that the opposing magnetic fields surrounding each conductor will cancel each other out. In this case it doesn't really matter whether or not the neutrals are connected at the 4-way switches. The problem here is that the builder has chosen to wire the circuit in such a way that the neutral current is dividing onto parallel conductors in parallel cables between the 2 sets of 3-way switches. With only one set of switches in the "on" position, one load is being supplied through one set of cables, and the returning neutral current is evenly-dividing between the 2 sets of switch cables. With both switches on, each cable will carry the hot current pulled by its supplied load, and they are not likely to be the same amount of current, while the returning neutral current will evenly divide between the 2 parallel neutrals. Only if both loads draw the exact same amount of current will the magnetic fields cancel each other out in each cable. Because the loads requires 2 switched hots and 1 common neutral, the builder should either have: taken power to the loads first, dropping the neutral off there and run separate cables at that point to and from the sets of switches. or: taken power to the first set of 3-ways and then suppled the loads from that point through a single 12-3 cable containing the common neutral and both switched hots.

What do things look like in the other switch box in the closet you are talking about? Harder to see is what wires enter and exit the box at the light. The simplest set-up for a home owner to deal with will have a single gang box with one non-dimming 3-way switch at each location, and just one (black/white/bare ground) cable and one (black/red/white/bare ground) cable in the box with the switch. The cable that contains the red should go from box to box and makes up the travelers. The black and red ends of this cable should land on the screws on the switch that are the same color as each other (usually not black). The other cable either comes from the panel (the feed in) or goes to the light (the feed out). Put the black from this cable under the unique colored screw (usually black and sometimes called the common or point). Splice together all of the white wires and use the bare ground to ground each other and the switch and the box if it's metal. If you have a different wire arrangement than this, (and there are several that are both different and correct), and if you have only a small amount of experience then you would probably be well served by hiring a pro. I personally can't recall ever seeing or installing a 3-way in a walk-in closet and the black conductor landed on the ground screw makes me think that you will end up hiring someone to sort this out. Good luck.

Let me add this is off a garage subpanel that has 2- 20A breakers tied together so I assume its sharing a neural. The extra black wire in box 1 controls one of three lights (single pole, one of the red travelers are capped). Is it possible to cap one of the travelers in box 2 (3way switch, 3 wires in box) and installing a single pole there? Is there a hazard keeping it as it is now. ?? ie: One box with single pole controling all 3 lights. Second box with 3 way only controling 2 of the lights when power is on at switch one.... no power to switch when switch one is off. Again about the hazard, is this a fire/shock hazard or one of those things that it works or it doesnt?

I went to Lowes, even bought the four pieces, and then decided that rather than have to do the work to get them to look like one piece, then paint them, andthen live with the fear of cracks appearing all the time, I will just order a paintable wood one from someone online (there's someone on eBay who makes beautiful wood switch covers--I'm having some made just in hard maple to paint). If anyone's interested, I'll post my opinion of his work when I get it; it comes highly recommended by folks over on the Home Decorating Forum, btw. Thanks for all your help!