Sorry to get back to this so late, but something is definitely going on here. I have seen the SPServices code and it looks like it should work. However, as this is Marc's code I am not going to claim I know it as well as he does. The main issue here I think is that this type of lookup draws a very complex set of boxes on the screen and it needs to control/filter each subsequent box. Have you validated the different developer tools to be sure there is no javascript errors, and also maybe check the response object for the second one to see if it has an error.
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