Which options do you have selected for your Physical Inventory worksheet report for selecting items? The 3 choices are:
'All items from inv. list', 'Items from loc. only' and 'Items active at location'. Do you i'suppress inactive items'?

Also, you mentioned printing the worksheet based upon the picking sequence. Does this mean that you simply sort the report by picking sequence, or do you enter a starting/ending range to select only particular picking sequences? If a range, what range do you enter?

Lastly, what format do you use for your picking sequences? Are they strictly numeric, alpha-numeric, with capital or lower-case letters, special characters, or others? That may help in determining if the report selection is choosing different picking sequences that what is being generated for the Edit Physical Inventory.