Thanks. Add these two blocks taken from ESRI create mosaic dataset example code.
All works now.
// Create a calculate cellsize ranges parameters object.
ICalculateCellSizeRangesParameters computeArgs = new CalculateCellSizeRangesParametersClass();
// Use the mosaic dataset operation interface to calculate cellsize ranges.
theMosaicDatasetOperation.CalculateCellSizeRanges(computeArgs, null);
// Create a build boundary parameters object.
IBuildBoundaryParameters boundaryArgs = new BuildBoundaryParametersClass();
// Set flags that control boundary generation.
boundaryArgs.AppendToExistingBoundary = true;
// Use the mosaic dataset operation interface to build boundary.
theMosaicDatasetOperation.BuildBoundary(boundaryArgs, null);