Hi Leema,
To handle this problem, instead of trying to move from the current cell to the disable cell , try move from the currentcell to any enabe cell using MoveTo call with GridSetCurrentCellOptions.SetFocus and set a flag there and remember where you want to MoveTo. Then in CurrentCellActivating, test this flag, and if it is set, change e.RowIndex and e.ColIndex to where you want to go.
Please refer to the attached sample for more details.
GCmoveTo.zipBest Regards,
Haneef