I have installed a new tub surround and am ready to install drywall (greenboard). The surround has a lip that is to be covered by the drywall. My question is... are there any special tricks or tips to making the joint smooth and especially water tight? I read a help forum that said to caulk with 100% silicone but 100% silicone is not paintable! ANY SUGGESTIONS WOULD APPRECIATED.

The green board will lap onto the flange of the surround, it doesn't have to touch the top of the surround, in fact it can stay a 1/4" a way, what you'll need to do is run a piece of drywall tape along the edge of the drywall and let it touch the top of the surround, follow this with 3 coats of mudd, and sand, prime, paint,
As far as water tight, you shouldn't have water up on top of the surround anyway, it also has the surround lip that is made for keeping water from getting behind the surround.
As for the caulk you can use silicone under the drywall before you tape the joint between the shower surround and sheetrock edge

There is a vinyl strip that you can get at the home depot to make this transition it should be in the same section as the spakle or corner bead

You should consider using Densboard instead of greenboard. As far as the lip is concerned, the seal between the backboard and the surround will be taken care of if you overlap the lip at least by 1/2" and then the surface (tile? Stone?) will provide the water tight seal between the surface and the backboard.

Once you have set the tile, then you can place the silicone at the seam between the bottom of the backboard and the surround lip.

You shouldn't have a problem with the joint at the bottom of the surround since it's made to fit in this fashion.