it does. i've found a workaround which requires a bit of manual dexterity. you have to be ready on the other side of the unit and quickly flick from the nav pad to enter within less than a second one handed, having pressed the preset button with your other hand. also you have to go one by one through the setlists if the one you want is not adjacent or directly above or below the one currently highlighted. it's a pain but it's do able.
but, as you mention, it leaves an unpleasant taste in the mouth to be duped in this way.
i've not decided whether to go through the rigmarole of sending the unit back yet though i might try for a partial refund which i should be entitled to i would have thought.