Found part of the culprit, but can't figure out the solution.
in 'fume-rescan-buffer', working modes don't flag the error caught by the 
condition-case, i.e.
	(setq fnam
		(condition-case ()
			(funcall find buffer-to-scan)
		  (error
		    ; reached every time with LaTeX's find routine,
		    ; not reached with C, or Makefile, etc...
(the comments were added by me).
So there is something in fume-find-next-latex-section-name which is 
throwing the error.  It might be occurring in the code after the initial 
let* statement (which extracts the correct function name), but I don't 
have time (until tommorow) to figure out where the rest of the bug is, 
or what the solution will be.   And, it might not (be occurring then).  
Sigh...
best,
-tony