Autocomplete module does not work correctly in Dialog. It looks like layer with option is displayed between background screen and dialog screen thus options are not visible. If you have many options (over 40 options) and standard size of Dialog you can see that last 5-10 options are visible below Dialog box.
Tested it with tersus 1.0.3 and firefox 22.214.171.124 on fedora 7.
For best results, use the Firefox browser..