Conditional shading of a cell or row in Microsoft Project is not possible. What I would recommend is to add a graphical indicator to your "Status Notes" field. The graphical indicator won't shade the entire cell or row, but it will give a graphical indicator just like you are looking for. To do this, go to the Project tab --> Custom Fields and choose the field that you are using for your "Status Notes" field. Then click on the Graphical Indicator... button and set it as shown below:
Test - Equals
Value - 0
Image - Leave Blank or choose a white image
Test - Equals
Value - 1
Image - Leave Blank or choose a white image
Test - Equals
Value - 2
Image - Yellow dot
And so on...
Then, you just need to select your appropriate dropdown value in the cell and it will automatically display the appropriate colored dot. Not the ideal situation, but it does work.
You could also add the graphical indicator to a different field and just reference the "Status Notes" field in the formula field of the new field. For example, if your "Status Notes" field is Number1, then you would enter [Number1] into the formula box of the new graphical indicator field...
Hope that helps!