Hello Pathiya:
After spending lot of time on this issue, I found that this issue is not only with CRM 4 but also in CRM 2011.
It occurs when the CSS attribute: ime-mode of the dropdown changes to 'auto'. To resolve this issue, change the value of ime-mode from 'auto' to 'active' and it will work fine for sure.
Thanks.
Saurabh Gupta, MS CRM 2011 Software Development Engineer