I can also confirm this bug still exists (or again?) on a 10.04 32 bit
virtual machine. I can't choose "no". Is there a workaround for this? I
didn't even choose anything before this dialogue appeared.

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Option 'No' at question 'Continue without installing GRUB?' does nothing. 
Forced to answer 'Yes'.
https://bugs.launchpad.net/bugs/580408
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