gistfile1.js

/* 

Above is how you comment-out code

AND(For_Special_Order__c = TRUE,   ISCHANGED(PBSI__Sales_Order_Line__c ), OR(PBSI__Sales_Order__r.Sales_Order_Status__c  <> "CANCELLED"),PBSI__Sales_Order__r.Sales_Order_Status__c  <> "RESERVED")

Below is how you end a comment

*/

/* I wanted to write you an example but keep yours here for comparison. Delete all comments when done. */

/* 
What I think you're trying to accomplish - correct if wrong:
- if special order item
- and if either status is changed to cancelled
- or if quantity is changed
- but not if sales order is tenative or previously cancelled
*/

AND(For_Special_Order__c = TRUE,
OR(
 ISCHANGED( PBSI__Total_Unit_Qty_Needed__c ),
 AND(
  ISPICKVAL( PBSI__Sales_Order__r.PBSI__Status__c, "Cancelled" ),
  ISPICKVAL( PRIORVALUE(PBSI__Sales_Order__r.PBSI__Status__c), "Cancelled" )
 )
),
NOT(
 OR(ISPICKVAL( PBSI__Sales_Order__r.PBSI__Status__c, "Tentative" ),ISPICKVAL( PRIORVALUE(PBSI__Sales_Order__r.PBSI__Status__c), "Cancelled" )
 )
)
)