Grace does not get stuck in an infinite loop. What happens is that a window in the background asking for the permission to overwrite comes up, waiting for an answer. Now, since the request panel doesn't show up in front of the device panel it looks like grace is stuck in the loop.
To try, repeat all your steps. In the last one, when grace appears to be stuck, move the device panel on a side. A dialog panel with the confirmation request is there waiting for an answer. Either answer will "unstuck" the loop. I am not closing this bug, as the dialog panel should come up on top of the other panels, not at the bottom (the title/description of the bug should be changed however).
