Back in March I bought myself a Dell Optiplex 320n to replace my desktop computer. There were two tricks to the install. One was a kernel option which wasn't a big deal and the other was that GRUB would not work. GRUB replaced LILO as the standard Linux boot loader quite a while ago. I don't think Fedora even includes LILO anymore. Luckily I'm still running Debian at home. :)
While in New York I stumbled across Debian bug 419766 which covers the problem for Debian. It states that the default version of GRUB installed is GRUB Legacy and that GRUB 2 is now in the tree, please try that. Just this weekend I found the time to try it out. It works! But there is a catch. Don't configure the graphical terminal or load the font, it'll leave your Optiplex 320 in a reboot loop.
So I'm happily booting with GRUB again, it's just not the same GRUB that other distributions are using.
Thank you letting the world know about this. We had to get that machine running really urgently and your post came most welcome.
Turns out the problem is not with the graphical terminal in GRUB 2. The problem is with the XFS module. So if /usr/share/grub is on XFS or if /boot is on XFS, don't use GRUB 2.