Anaconda in limbo beta 2 installs grub and correctly detects an existing Windows partition, but it fails to detect existing linux (ext3) partitions. Even after adding the entry manually (/dev/hda2), it doesn't enter all the necessary information in order to boot that partition (from /boot/grub/grub.conf): title Red Hat Linux 7.3 rootnoverify (hd0,1) chainloader +1 The "kernel" and "initrd" entries are obviously missing. Anaconda should probably look at any existing grub entries and determine whether they're still valid (on a partition which isn't affected by the current RedHat install) and if so, then add them to the new grub menu.
If you're doing a fresh install and you change the boot loader configuration, then we're just going to put what you said to there. And the detection of existing Linux installs is much trickier, especially for chainloading purposes. That's why you can now select to add the install.