Same thing here installing Natty beta 1 (destkop 32 bit) on a VirtualBox
virtual machine.

The name I typed not really existed on the network (I had only one PC
connected).

When going to password textbox and typing, the message disappeared and I
was able to go ahead.

** Attachment added: "screenshot_001.png"
   
https://bugs.launchpad.net/ubuntu/+source/ubiquity/+bug/738732/+attachment/1991359/+files/screenshot_001.png

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https://bugs.launchpad.net/bugs/738732

Title:
  Name already exisits  on your network in "Your computer's name" in
  "Who are you" page even when this is random text

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