Wayne,

Even if you find out how to get the index on the udf to work you still have a major problem here, if the user edits the company name then the index will not be updated on the employee table to reflect the change because the indexes are only updated t=for the table that was changed (in this case the company table). Indexing a table on a value in some other table is a BAD idea wrought with potential problems that will be difficult to debug and impossible to fix.

Find another way. Use a view to combine the employee table with the company table and order it on the company name and then relate that view to your third table for the grid.