Master related an unheard story of Babaji and Adi Shankaracharya with the latter becoming a disciple of the great master.Does this mean Babaji is spiritually more powerful than these exalted yogi? There must be some reason why master narrated this incident.What is that?
Yes, Paramhansa Yogananda did indeed relate that story; you can read of it in Conversations with Yogananda. However, it is never helpful to think in terms of who is more or less “powerful” than anyone else. And it is especially unhelpful to compare two great masters in this way, because they come to earth to play particular roles, and an essential aspect of their lives on earth is being a human being. So Yoganandaji took initiation from Sri Yukteswar, who had taken initiation from Lahiri Mahasya, who had taken initiation from Babaji. Yet all of these were avatars, fully united with God, so it is pointless to ask who is less or more powerful than whom. Being one with God, all of them are equal. Such comparisons are, at best, distractions from what is truly important: tuning in to their consciousness.