I can reproduce (a part of) this bug as follows:
1) Have another computer on the network with e.g. the name 'abcd'.
2) Type 'abcd' as the name in the installer, it correctly warns.
3) Add some letters to get the valid name 'abcdefgh', it still warns.
4) Edit your name, now the warning disappears.
This is with the beta iso testing image 20110830.
** Changed in: ubiquity (Ubuntu)
Status: Incomplete => Confirmed
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https://bugs.launchpad.net/bugs/828181
Title:
ubiquity incorrectly reports computer name "already exists on the
network" until text in other fields is changed
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