Created a custom field of type select list and added various options to it. But when displayed in the issue creation screen it is not seen as a drop down list; the values are not active and does not allow selection.
You'll need to give a lot more detail here. We have no idea how you "added various options", what you've done with the view, how you've configured it or anything else. It's not even clear whether this is a standard field, or one you've written yourself. Even "the values are not active" is not very helpful in describing what is wrong.
Could you tell us exactly what you have done?
The Jira version we use is 4.0.1; The added custom field type is 'Select List', which is a standard one. The various options were configured through 'Edit Options' function.
Not sure what could have gone wrong and why the values are not active?
Ok, what does "not active" mean? Do they not appear in the list at all?
Having asked that, I actually suspect you've got the "context" wrong. You can define a select list, with several possible sets of options, and say "use set 1 for project A, set 2 for project B, set 3 for project C" and so-on. My guess is that you've defined "set 1 for project A" and are expecting it to appear in project B? Go to the list of options and look at the top where it should say "this context is for projects..."
Some screen shots etc at https://confluence.atlassian.com/display/JIRA/Configuring+a+Custom+Field
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