Hi Josh,
Thank you for sharing your experience.
I never got a load balancing error, probably this is not a SAP GUI 740 issue and could be a server problem.
Did you remove the '/H/' form the saprouter string as mentioned in sap note 2077230?
My saprouter string including the '/H/' at the end does work with option "Group/Server Selection", but it does not work with option "Custom Application Server".
After removing the '/H/' both options are working without any problem.
Peter