Collection was modified; enumeration may not execute error when removing a ListItem from a LIstBox

It's not possible to modify a collection while you're enumerating it in .Net. You need to separate out your enumeration and remove code into different blocks. Here is a quick sample on how to do that in without LINQ

protected void btnAdd_Click(object sender, EventArgs e)
{
    var selected = new List<ListItem>();
    foreach (ListItem item in lstAvailableColors.Items)
    {
        if (item.Selected)
        {
            selected.Add(item);
            lstSelectedColors.Items.Add(item);
        }
    }
    foreach (ListItem item in selected)
    {
        lstAvailableColors.Items.Remove(item);
    }
}

And here's a more concise version using LINQ

var selected = lstAvailableColors.Cast<ListItem>().Where(i => i.Selected).ToList();
selected.ForEach( x => { lstSelectedColors.Items.Add(x); });
selected.ForEach( x => { lstAvailableColors.Items.Remove(x);});

EDIT

The LINQ version works in two parts. The first part is the first line which finds the currently selected items and stores the value in a List<ListItem>. It's very important that the line contain the .ToList() call because that forces the query to execute immediately vs. being delayed executed.

The next two lines iterate through each value which is selected and remove or add it to the appropriate list. Because the selected list is already stored we are no longer enumerating the collection when we modify it.

You cannot modify an collection while you are using an Enumerator for this collection, what the for each statement does.

You have to loop over the data with a normal for loop and then you can modify the collection, but you must be careful to correctly update the current index if you insert or remove elements. If you just add or remove elements and don't insert some, iterating from the last element to the first will do.

protected void btnAdd_Click(object sender, EventArgs e)
{
    for (Int32 i = lstAvailableColors.Items.Count; i >= 0; i--)
    {
        ListItem item = lstAvailableColors.Items[i];

        if (item.Selected)
        {
            lstSelectedColors.Items.Add(item);
            lstAvailableColors.Items.Remove(item);
        }
    }
}

You cannot modify a collection you are iterating on. In general, a good solution for this type of problem is to create an empty collection, and in your iterator, copy over all of the elements you do NOT want to remove; after the iteration is complete, replace the original collection with your new collection.