where is your original post on this? That was a great find.
It seems that the problem is even wider than you described: even if you pick a value for field1 and select list for field 2 is limited to corresponding values for the selective select list - the way it should be, but if you type anything in the field2 from select list for column2 - it will still allow you you to store.
In short, in DW7, external Selective Select list only works for dropdown values, but does not work to restrict store values.
Hope Docuware will issue a hotfix soon.