After working with Customer Service, Tax Consultant, a Supervisor, and "Lead", they confirmed there is a programming (code) issue and that "Engineering" would fix it for next season. I was apparently correct, the M1M form is not recognizing the "Not a K-12 student" option from the worksheet.
The suggested options for now are:
1. Enter 12 (or perhaps K pending the non K-12 condition) and the system will recognize it and verify without error. This works if there are NO qualifying expenses to be claimed for that child. OR
2. Print a hard copy and mail in your return.
