。
She picked the best of all the jewels in that shop.
Literal
She [topic-は] that shop [in-に] are all [genitive-の] jewels [genitive-の] among-中で best [genitive-の] thing [object-を] selected.
その店にある is a relative clause modifying 全ての宝石: 'all the jewels that are in that shop.' Note ある, the existence verb for inanimate things — would shift to いる for animate beings. の中で ('among, within') marks the comparison set out of which the choice was made: the best out of all of them. いちばん is the everyday colloquial superlative, equivalent to 最も in writing. ものを選ぶ uses the placeholder noun もの ('thing') to mean 'the one' — a useful pattern for 'pick the best one' without specifying which item it is.