The problem is you are doing spritebatch.end before doing effect.end

t is the distance to the intersection: Vector3 intersection = ray.Position + ray.Direction * t;

That book is quite good, in fact I have ported a majority of the methods in it to xna: Helpful XNA Collision Detection Functions. You can find a slew of collision detection articles on my website under the tag: Collision Detection.

Try running the sample here:  Model Triangle Selection in XNA

Collision can be quite frustrating. It may help if you describe the type of collision response you are looking for. I have a sample showing how you can do Splitting Octree collision in XNA. This method uses a sphere to collide against the world and supports sliding. This method has been well tested and is very stable in the sample application I ...

Looks like you need to set the texture mode to Wrap, it must have been set to Clamp some where else.

Check out my latest article on Rendering Avatars in XNA

I have written a short tutorial on how to use the avatar rendering system in XNA: Rendering Avatars in XNA

I would be more than happy to help trouble shoot the issue if you can upload your project on my forums as an attachment.

Ziggyware XNA Sprite Sheet Creator