Can you just use an OR function instead?
i.e.
=IF(OR(A57=$M$78,A57=$M$79, etc. etc.),"Failure_C01", FALSE)
It's strange though as Excel 2007 should accept longer functions like this one. Is the source file saved in the latest data format or an old one like 97-2003?
[edit] Sorry, ignore me. Was reading more than one thing at a time.
It should work by writing the formula into a cell and then referring to that cell instead of typing the formula into the data validation window?
e.g. in the data validation you write =$A3 and in A3 you write your formula as above and it should work.
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