Computational capability has been developed to adjust multigroup neutron cross sections, including self-shielding correction factors, to improve the fidelity of boiling water reactor (BWR) core modeling and simulation. The method involves propagating multigroup neutron cross-section uncertainties through various BWR computational models to evaluate uncertainties in key core attributes such as core keff, nodal power distributions, thermal margins, and in-core detector readings. Uncertainty-based inverse theory methods are then employed to adjust multigroup cross sections to minimize the disagreement between BWR core modeling predictions and observed (i.e., measured) plant data. For this paper, observed plant data are virtually simulated in the form of perturbed three-dimensional nodal power distributions with the perturbations sized to represent actual discrepancies between predictions and real plant data. The major focus of this work is to efficiently propagate multigroup neutron cross-section uncertainty through BWR lattice physics and core simulator calculations. The data adjustment equations are developed using a subspace approach that exploits the ill-conditioning of the multigroup cross-section covariance matrix to minimize computation and storage burden. Tikhonov regularization is also employed to improve the conditioning of the data adjustment equations. Expressions are also provided for posterior covariance matrices of both the multigroup cross-section and core attributes uncertainties.