In Excel 2007 and I think in 2003 as well it works to put in source the range as =[sheetname]![First cell of the range]:[Last cell of the range]
In our example it goes like:
Activate the cell on Sheet1 where you want to choose from the list
Activate Data|Validation.
Choose List for Allow.
Enter in the box for Source:
=Sheet2!DC11:DC202
Click OK.
(Error: "You cannot use references to other worksheets or workbooks for Data Validation criteria" appreas if you have only one cell as lists source. For any range from another sheet even =Sheet2!A1:A1 it works perfect.)