capricorn1,
I got it figured out. If the main form has a value set for the Order By property, then the Data Entry setting will not work on the subform. (See Figure 1 attached). I'm not sure why this behavior is acting this way, is this a possible bug A2007? (We have been running it with a Order By setting for 1-2 years in A2003.)
I removed the entry in the Order By property on the main form and it started working fine.
-Jed