I'm using Prompt With List action, the user will not know what the options are ahead of time (to search).
They also my not understand the purpose of the select list without at least the explanation of title.
Am I understanding it correctly that if a title is used in the title field of the macro, the whole list is not displayed and user must type for the prompt?
Short Answer: Yes
While I really like the Prompt with List, this behavior is a major PITA. 
A fix for this has been previously requested, but so far no joy.
@peternlewis, could you please reconsider this request?
Thanks.
My same answer remains - I do not have a UI solution that I like that will show the title and the search text, and the latter is required if it is showing entries.
Maybe one day I will come up with something I am happy with, but I don't have a solution currently.
hmmm, maybe using an applescript 'choose from list' would be a workaround....
Well, I don't know who "IU", or even "UI" is, but we have had another solution for a long time:
MACRO: Spotlight Search Prompt by @DanThomas.
I've been using the KM Prompt with List because it is easier to set up.
Since you wrote the KM HTML Prompt that Dan's macro uses, it seems like a good candidate to me for you to start with that and offer it as a KM Action.
I have recently been very frustrated by a number of the KM Prompt with List behaviors and limitations. I think I've now learned my lesson to NOT use the KM Prompt with List, except for very simple cases, and even those are thrown into doubt by this behavior, ==which will really confuse a user who didn't write the macro==:
These are getting very close to being deal-breakers for me.
I really hope @peternlewis you can come up with a solution soon.
Keyboard Maestro does not try to be a UI that is capable of solving all problems.
It provides a set of tools and a set of ways to get some input as needed for macros.
It will never be an alternative to a fully blown UI written as a native application or even as a web app.
If you think a place where a Prompt with List is going to be ambiguous to the user, then by all means use some sort of pre-window to describe what is required and why, or use a Custom HTML Prompt to build a full blown web app or whatever other solution might be appropriate.
Its features grew out of various other UIs that require a selection from a set of items, in response to a specific user input to display the list, so the meaning of the prompt is implicit in its existence in those cases, and when running the macro it should be implicit in the instigation of the macro - if not, then an explanation of the requirements might be appropriate.
The Prompt With List action will no doubt gain some more options over time, but it is never going to meet all possible needs.
Not looking for "all possible needs". Looking for the most basic need every prompt used needs: Inform the user what the purpose of the prompt is. This is almost always done by the window title of the prompt.
This is not asking for an "all" solution. It is asking for a common sense solution.
If you don't know how to provide this, or it will cost too much of your resources, then you can so state, and it will be a rational reason. I surely hope that since this is such an obvious, common sense requirement, that you immediately understand it.
I suspect I'm long past the stage of beating a dead horse, so I'll leave it alone, for now.
I've seen you do some incredibly brilliant things, Peter. There are many parts of KM that I am in total awe of. I know that once you have decided to tackle a problem or design challenge, you will very likely overcome it.
I can only hope that one day this design challenge will become one of them.