Clicking 'Initial Deployment' in the 'Predefined Computer Confirmation' dialog discards the selected predefined computer and creates a new computer resource.
When a predefined computer is defined with only the host name a list of host names is displayed in automation for selection - 'Predefined Computer Option' dialog. After selecting a predefined computer from the list, a confirmation dialog is shown - 'Predefined Computer Confirmation' - that includes the 'Initial Deployment' button. When the 'Initial Deployment' is clicked, the selected predefined computer info is not used and a new computer resource is created.
DS 8.x
This is working as intended, the disconnect between what you would expect to happen and what actually happens comes primarily from the place when the 'Intial Deployment' button is presented.
When you PXE boot a machine and select the predefined hostname from the list ('Predefined Computer Options' dialog), the agent actually goes to the SMP and checks if the machine is predefined (and thus, managed). If it is, the status window at the bottom of this dialog will show the computer GUID.
The next dialog that opens is 'Predefined Computer Confirmation', which provides choices to Continue, Back, or Initial Deployment. While the first two are self-explanatory, the 'Initial Deployment' is a little out of place here. When you click on the 'Initial Deployment' button, all knowledge about the predefined machine is dropped and the agent reverts to the Initial Deployment process that inherently works with unknown computers and is expected to create a new computer record.
This does not happen when computers are predefined with a MAC address. This is true, in a way. When a computer is predefined with a MAC address, the MAC address will be automatically detected when the agent starts and the client proceeds to the predefined machine process, skipping the selection and the confirmation dialogs entirely - not giving you a chance to click on the 'Initial Deployment' button. In terms of these dialogs, this equates to selecting the correct predefined computer record and then clicking the Continue-on confirmation dialog.
It is also worth noting that the list of tasks/jobs displayed is different depending on whether you click 'Continue' or 'Initial Deployment'. The Task/Job selection displayed when detected by MAC address or clicking 'Continue' is a list of jobs defined for Managed Computers - 'Re-Deployment (Managed Computer) Menu' section in the SMP Console under Settings > Deployment > Initial Deployment. When clicking 'Initial Deployment', the jobs listed come from the same settings page but a different section - 'Initial Deployment (Unknown Computer) Menu'.