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Ok, so this is what I have found so far. Hopefully you can read my poor attempt at a diagram.

Very top is the breaker box. The box directly below is the one from the pics I posted. So yes, I have a borrowed neutral for the light connected to that box. It gets power from 1, and neutral from 2.

Then there is 3. So when I cut the breaker to 3 ALL the lights go out, including the one up top coming out of the breaker box on 1. I suspect if I took the cover off the breaker box I would find that 1 and 3 are connected to the same breaker.

3 by the way goes on to power like half the house. This diagram is just the basement.
 

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Ok, so this is what I have found so far. Hopefully you can read my poor attempt at a diagram.

Very top is the breaker box. The box directly below is the one from the pics I posted. So yes, I have a borrowed neutral for the light connected to that box. It gets power from 1, and neutral from 2.

Then there is 3. So when I cut the breaker to 3 ALL the lights go out, including the one up top coming out of the breaker box on 1. I suspect if I took the cover off the breaker box I would find that 1 and 3 are connected to the same breaker.

3 by the way goes on to power like half the house. This diagram is just the basement.
I bet you are right, I’ve opened many panels and seen many breakers double tapped which is a violation also
 
I think you guys are on the right track.

My confusion now is this. If we assume the light circuit is wired at least sort of ok, and the red wire is a switch leg for said lights, then what is the black/white pair going out the left of the box for? As far as I can tell it doesn't power anything. It certainly doesn't power the lights, because I can shut power to those wires off and the lights stay on.

I'm going to pull the light socket on the other end of that left cable and see what is going on there.
Keep in touch and let us know what’s going on. Good luck with your project
 
OK, agreed, the light between the switch and the original box uses circuit 3's hot but borrows circuit 2's neutral. I was more or less expecting that.

Seems you have three choices: Pull some more cable in; make the whole shebang into one circuit (sounds like a bad idea if circuit 3 is heavily used); or change out that old cable, put the cover back on and walk away.
 
I'm going to finish what I started, and then continue mapping out how this whole mess is wired. I don't understand why they half assed it in the basement of all places. It's unfinished, exposed beams, so running a few extra cables to do it right is easy.

Considering rewiring the basement lights entirely. The circuit they're on is pretty big, quite a few upstairs rooms on it. The other basement circuit that I started working on in the first place has hardly anything on it, seems the solution is to put the basement lights on that.
 

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