Follow the Following Steps
1.Create the attribute/picklist in the Microsoft CRM entity customization
2.Add at least one option
3.Export the entity as XML
4.go here: http://www.beatnik.at/picklist_for_mscrm.php
5.Enter the desired picklist values into the textbox
6.Click "Generate XML"
7.Open the XML-File that you exported in step (3) with WordPad or your favourite TextEditor (Notepad tends to have problems with encoding)
8.Search for the displayname or the schemaname of the attribute
9.Replace the options tag with the XML-String generated in (7).
It might look like that:
10.Save the XML-Customizations File
11.Import the File into MS CRM and publish
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