Kassie,
It might not work for you,but the way we do is by creating a SharePoint Group with all the users that they are allowed to select. Again, this worked for us because, we only had handful of them that we need to restrict on. if you have many, this might not be the right approach.
Then in SharePoint List create a new column of person field and then set the value to only allow to select from the SharePoint Group that you just created above.
Add this field to the form and they will only be able to get a valid user which exists in the Group defined. This way, no special validation is required, all we then need to check is whether that field is empty or not.
Thanks for the reply Shaju!
The selection could be any of the two thousand employees that work here so the list would be a lot of upkeep and a lot to set up initially. :-/
I'm sure this could be done with a list and web call to pull the people from AD and remove the contractors and admin accounts but this sounds like a lot of work for something that I feel should be doable in the form with a formula.
Hi Kassie
Do you have something in the login name that identifies all these accounts?
The login format we use in my organisation is: i:0#.w|domainlogin. My login is the first 4 letters of my surname (craw) and 4 random numbers.
I set up a contains validation rule, contains(string,element) where string is the string of my login name and element is what i am looking for as below:
where people is the Named Control of the people picker field
This is the result:
As long as you can easily identify the people you want to exclude you should be able to base your solution on this.
Let meknow how you get on
Regards
Paul
You're right, the field was pulling : i:0#.w|domainuserID
I ended up doing a user profile lookup to pull something that I would validate with.
Here's the final formula:
contains(userProfileLookup(ServiceAccountOwner,"LastName"),"CONTRACTOR")
I had to look up the info in our AD accounts to see where we added whether someone is a contractor or not... apparently its after their last name. lol
Thanks so much for your help. 
Kassie
