As a temporary workaround I did the following:
I added ProjectTypeVendor as an attribute to ProjectVendor and its dropdown filter is more straightforward:
FIND ProjectTypeVendor WHERE ProjectTypeVendor.ProjectType=ProjectVendor.Project.ProjectType
Then in a business rule for ProjectVendor, I coded the following, which behind the scenes, assigns the Vendor:
IF ProjectVendor IS NEW THEN
ProjectVendor.Vendor=ProjectVendor.ProjectTypeVendor.Vendor
I consider this a hack, and would rather assign the Vendor in a single filter.