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Default Data Validation

I thought I had this one figured out. I have a column containing either NOT
TAGGED or a unique series of characters.
I put this in the next column =IF(A2="NOT TAGGED", "NOT
TAGGED",COUNTIF($A$2:$A$500,A2),=1)
and it works great.

So I went to the column where I want the validation and the first cell. I
clicked on Data Validation (Excel 2007) thenSettings then picked Allow then
Custom and then in the formula bar put the formula above.

I got no error but it finds NOT TAGGED as a duplicate when it is entered in
a cell. If I use the countif part only it prevents duplicates. However, I
want to allow duplicates of NOT TAGGED and thought the IF statement should
take care of that (and it does if the formula is in the next column) but it
will not work using the Data Validation icon process.

Why?
--
Thank You
 
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