If you have an item on order (Layaway/Back Order/Work Order) which has no On Hand quantity, you can still pick up the item. This causes the quantity to become a negative number, even though the "do not allow sale of items when out of stock" option is set.
Either the order pick-up routine should be modified to respect this option, or there should be a new option for "do not allow pick-up of items when out of stock".