I'm sorry to respond with a "me, too" instead of a solution, but I believe your problem and mine may be related. In http://groups.google.com/group/django-users/browse_thread/thread/f1219e342a8c89f0 (with a title of "selected" for ForeignKey field?), I have a ForeignKey field. When I use a Generic View to update an existing object, the SELECT for the ForeignKey is correctly rendered, but the existing value is not selected. Is that what you see, or is there some other problem with the SELECT tag?
If you are seeing the same thing, I might feel more comfortable knowing that it isn't just my syntax. I might try to dig in and see where that is happening in the view and see if there is a problem or something we've both omitted. H.B.