You're confusing two separate standards -- being adjudicated mentally ill and dangerous is one thing; being adjudicated mentally incompetent is completely separate from that.
I find the same language here
And Title 18 Section 40 referenced in the first link is ATF related, though I haven't drilled down the rest of the links.(Because I think, but can't be sure CFR is some sort of shorthand for Executive Branch Department Promulgated Regulation.)
Edit For Clydefrog Just saw your post.
and backtracked to this one:
These "what if" topics spin all over between members discussing persons who have already adjudicated & those still in the process.
I understand the concern over starting databases & the required criteria, that's a valid point of discussion, my problem is that these TFL topics swerve into "who's to say who is unstable?" Or Obama's gonna take my guns because I have migrane head-aches,
The process for adjudicating is as important and the process for reporting. An "insanity plea" or a finding of not guilty by mental disease or defect, or incompetent to stand trial all feed into NICS, and there's probably an almost automated system for this in many places. If this is done in some form of family court at the request of parents of a minor child, the process may not even exist.
Finally, I should point out to you, that the number of records for those adjudicated mentally deficient far outstrip the number of records for those convicted of a prohibiting offense. Mental Deficiency was the second most populous result.