When using a View to create a select field in a form in this way I have found it to be very sensitive to whitespace that the View outputs (even when you disable the wrapper div and eliminate whitespace from the Loop Editor) but found it works when using the Loop Wizard and choosing the List with separators output format.
Could you try the same?
Edit the View and use the Loop Wizard. You'll need to insert any field as a placeholder, then replace it in the generated markup with
I think copying the whole block I posted above may have affected the whitespace.
If that does turn out to be the problem I'll need to speak to the developers about improving the output of a clean View so that whitespace isn't a problem, because it shouldn't be so over-sensitive.