Any object that is selectable has the property select as an int. If the object is selected that property becomes 1, otherwise it is kept at 0. If you want to add a new selectable object, all you need to do is add the property select to any object. The orange rings that appear around selected objects are just logic bricks that use the select property to decide wether the ring should be visible or not. Its extremely easy to create and work with selectable objects, but not so easy to edit the scripts for selecting.
The drag selection part works by getting the centers of all of the objects and finding the ones that are inside the box. The click selection works by finding what object the mouse hit when you click. The readme in the file has all of the control information, please feel free to post any questions you may have.