Thanks a million HTH! That is working very well for me.

The only problem I'm having now is that after I press Enter on an
active cell (with or without data validation) - the active cell jumps 2
rows down and highlights the cell 1 row down. The highlighting is
enabled by...

Option Explicit
Private Sub Workbook_SheetSelectionChange(ByVal Sh As Object, ByVal
Target As Excel.Range)
Static OldCell As Range
If Not OldCell Is Nothing Then
OldCell.Interior.ColorIndex = xlColorIndexNone
End If
Target.Interior.ColorIndex = 6
Set OldCell = Target
End Sub

Any ideas on how to move the active cell correctly (1 row down) after a
hard return (Enter)?

Thank you.

-M