There is some confusion as to what is and is not allowed for married filing separately and not living with your spouse at any time during the year.
You had written: "Part II, Line 6 asks me to enter 150,000 or to see the form for Married Filing Separately. Taxact fills in 75,000 for this line. The next line (7) is my adjusted gross income. The adjusted gross income is more than 75k. Then it says that if the AGI is greater than the line above it (75k), then enter zero (0) on line 10. In other words, it seems that my losses are not deductible because my income is above 75K. "
That is consistent with the lines on the form:
5 Enter the smaller of the loss on line 1d or the loss on line 4 . . . .
6 Enter $150,000. If married filing separately, see instructions . .
7 Enter modified adjusted gross income, but not less than zero (see instructions) ...
Note: If line 7 is greater than or equal to line 6, skip lines 8 and 9,
enter -0- on line 10. Otherwise, go to line 8.
8 Subtract line 7 from line 6 . . .
When the amount on line 7 is more than the amount on line 6 there is no special allowance.
In your case when line 7 was more than 75K and line 6 is 75K the line 10 amount is zero.
This is consistent with the instructions for the form
"Modified adjusted gross income limitation. If your modified adjusted gross income (see the instructions for line 7, later) is $100,000 or less ($50,000 or less if married filing separately), your loss is deductible up to the amount of the maximum special allowance referred to in the preceding paragraph.
If your modified adjusted gross income is more than $100,000 ($50,000 if married filing separately) but less than $150,000 ($75,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your modified adjusted gross income.
Generally, if your modified adjusted gross income is $150,000 or more ($75,000 or more if married filing separately), there is no special allowance."
There does not seem to have been any problem with the software for 2011, but changing from filing single and getting the special allowance when your income was less than 150K in 2010 changed to not getting any special allowance when your income was more than 75K in 2011 due to the lower limit for married filing separately.
Sorry to say that there is no special allowance when modified adjusted gross income is more than $75,000 if married filing separately.
Of course, those losses not allowed are carried forward until they can be allowed or when the activity is fully disposed in a taxable transaction so all the loss will count, eventually.
Please ask if you need clarification or more information.