Maybe you could elaborate a bit on where exactly the problem is?

I don't think I have found your actual problem, but I have a number of comments on the code. Maybe a few of these will help also solve your problem, either coincidentally or by simplifying something which got too complex at some point.

The #!/bin/ksh line needs to be the very first line of the script.
This is not very modular. How about a single EJECT function which you'd call with an argument which is either 1 or 2?

Code:

EJECT ()
{
    local cap
    cap=$1
    echo "Ejecting to CAP 0,2,$cap"
    # /opt/OMIdtelm/bin/eject_vol -t 3600 -c 0,2,$cap -l $EJECTED_TAPES | tee $EJECT_LOG;
    echo "Ejecting Completed"
}

So further down in the script you would have EJECT 1 or EJECT 2 (or simply pass whatever number the user supplied, if it's within range -- anyway, you need to adapt the rest of the script, obviously).

You have this idiom throughout. This is known as Useless Use of Cat. You can just as well say `wc -l <$EJECT40`

This looks like it's supposed to loop back and ask again if the option was not valid. You could simply "return" from the function at that point in case of invalid input to at least avoid manipulating the log etc when nothing was actually done. Or put this in an endless while true loop and break out of the loop when a valid option was selected.

Code:

echo "Select TAPE CAP TO Eject to: Enter 1 for CAP1 or 2 for CAP2 (1,2)"
while true; do
    read cap_option
    case $cap_option in
      1 | 2) EJECT $cap_option; break;;
      *) echo "Invalid Selection - Please Re-enter";;
    esac
done

This also incorporates the new modular EJECT function from above. I left out the echo because the user's own input will already be visible on the screen. (I'd take out a few of those sleeps, too.)

I suppose this is supposed to be like this, read three space-separated fields into $volume, $until, and $EOF -- or is this pseudo-code?

PS. Please use code tags, especially when posting long programs