The 'udropship_vendor' attribute has a custom frontend_input type 'udropship_vendor', to allow having thousands of vendors without crashing.

Magento allows adding to layered navigation only for specific frontend_input types, which does not include the custom ones.

To allow adding udropship_vendor attribute to layered navigation filtering, and you don't need to have ability to setup thousands of vendors, run this SQL statement (Magento CE >1.4.1.0):

UPDATE eav_attribute SET frontend_input='select' WHERE attribute_code='udropship_vendor';

Then edit the udropship_vendor attribute and add it to layered navigation.