<?php

  $fc = file_get_contents('./test.txt');
  $fc = utf8_encode ( $fc );
	$lines = explode("\n", $fc);

  $html = '<select>';
  foreach($lines as $line)
     $html .= '<option value="' . $line . '">' . $line . '</option>';

  $html .= '</select>';
  echo $html;
?>

My only issue was with UTF-8 characters coming through garbled. Bodged a workaround using this encode entities plug-in for Dreamweaver.

<?php
$string = get_include_contents('somefile.php');

function get_include_contents($filename) {
 if (is_file($filename)) {
 ob_start();
 include $filename;
 $contents = ob_get_contents();
 ob_end_clean();
 return $contents;
 }
 return false;
}

?>

Also worth a look: file_get_contents

Why? Because Coda, my favourite Macintosh text editor+,  doesn’t do syntax highlighting of HTML for a PHP string. The site I’ve just finished for a high-end luxury villa in Marbella I had a big block of HTML to include (and work on) for the images page…

[Found in a referenced post linked to by Laura Carlson's excellent [webdev] reference pages (subscribe to the list server here)…]

…the secret, as explained by “Web Teacher” here, is simply to wrap the items you want to group  in the select list with

<optgroup label="group_title"> and </optgroup>

Another good point made there is that to make a select list multiple choice you just need to add the attribute multiple="multiple" into the opening select tag (and make it clear to the users that this is the case as well as how to actually select mulitiple items…)