I have two  problems with /etc/X11/prefdm

first of all, the lines like:

if [ -n "grep GNOME /etc/sysconfig/desktop" ]; then

actually tests that the string "grep
GNOME /etc/sysconfig/desktop" is not empty.

What you want, and what works, is:

if [ -n "`grep GNOME /etc/sysconfig/desktop`" ]; then

Also, when I select the AnotherLevel desktop, it fails
because /usr/X11R6/bin, where xdm is located, is not in the
PATH of prefdm.