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Funnily enough I was explaining that to someone else this morning ... But, you're not invested in the whole market.

I'd find it instructive to know the answers. I can't imagine no indexed stock has ever failed, nor that the indexes are a perfect insulation - you wouldn't need FTSE250 if the 100 was perfect, they do moderately different things.

Indexes are picked by "stock pickers" they're just picking conservative long, wide spreads AFAIK.

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A lot of indices are something like "Top [N] stocks weighted by market cap in [industry/region/country]". You could call those stocks 'picked', but it's not as though someone is doing some deep analysis of the companies' fundamentals or trading history in order to decide which stocks make it into the index. I think that type of analysis is the kind of thing most people think of when they hear about 'stock picking'.

Yes, no index is perfect. But most of them provide more diversification than the average person would be able to achieve by manually managing a portfolio.

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