If you receive the following error while editing a SharePoint list in Datasheet view.
“The text entered for lookup isn’t an item from the list. Select an item from the list, or enter text that matches one of the listed items.”
This may be due to having a lookup on a field that is too long. In my case I had a lookups to a calculated fields. These calculated fields where concatenations of other fields ie. First & Last Name. Well it seems like they were too large. 125 characters was too large but 122 wasn’t. There is a hotpatch for Office 2007 that seems to resolve this, but does not apply to those having Office 2003.
So reduce the sizes of the fields if you can. I basically copied all the data from the datasheet view and pasted it into Excel. I then used the LEN function to find the largest fields and reduced their size.
Here’s the Office 2007 HotFix if you need it.

