You have an error there, unless you wanted to include all child controls regardless of whether they're contained. It should be:
if (rect.IntersectsWith(ctl.Bounds))
{
Selected.Add(ctl);
Selected.AddRangeforeach (Control ct in ctl.Controls)
{
Selected.Add(ct);
}
}
As for the test, instead of two cases you can use:
if(rect.IntersectsWith(ctl.Bounds) == bContained)