Using a dropdown menu with arrow keys in Photoshop
I am not sure if you can do this with the arrow keys but there are shortcut keys for navigating the layers box

Changing layer styles


  (with layer selected) hold down ⌥ + ⇧ (option &amp; shift) and use the + or - keys to cycle through the various layer dropdown  


Navigation of layers


  UP  ⌥ + ] 
  
  DOWN ⌥ + [


Repositioning a selected layer


  (with layer selected) Move up a layer 
  with ⌘ + ]
  
  (with layer selected) Move down a
  layer with  ⌘ + [


these work for me with the CS5 version of photoshop