ShapeBuilder will only analyze simple polygons.  A simple polygon is one that does not self-intersect, or have touching vertices.  Vertices touch if two points share the same location (and are not adjacent). The screen shot below shows a polygon for which analysis fails.  The merged outside boundary is not a simple polygon, due to the shared vertex between the rectangles, which encloses the hole (circled in black). Less obvious complex polygons are sometimes created by small misalignments in the shape's geometry (e.g. small gaps where shapes are meant to connect). To fix the analysis problem, either increase the overlap so that it is more than a point or create a gap so that the shape is not closed.