If I do observe_form as below, the ajax call never occurs, but If I remove the table it works fine. This is just a test to troubleshoot as I had narrowed down my problem to this, I actually wanted a form per row of the table:
<table> <tr>
<% form_tag({:controller => 'sheet_entry', :action => 'pass_input'}, :id => 'frmx1') do %> <td> hey <%= text_field_tag 'xx', 'xxx' %> </td>
<%= observe_form('frmx1', :url => {:action => 'ajx_form_changed'}, :frequency => 0.5)%>
<% end %>
</tr> </table>