I think you're right. HnS has performed exactly as it should and has created the grub menu which works perfectly on a non-raid system.
The problem seems to be grub is unable to locate that file (which we can see is there). The file's only purpose is as a label for the precise purpose of allowing grub to identify the partitions correctly. (there's nothing in it)
It's a legacy of multiple problems with the earlier builds where using (hdx,y) notation was not consistent if a SATA/IDE mix of HDDs existed on the disk (Vista and BIOS number them differently), so CG got round the problem by sticking unique HnS labels on everything and using the grub "find" command.
There's no grldr except in the HnS installation folder because the way HnS works is by renaming Vista's bootmgr to bootmgr.hnS (yes that's the real one) and usurping the boot process by putting grub4dos (grldr) in its place (renamed as bootmgr).
That way the normal Vista MBR/IPL looks for its own bootmgr but is fooled into executing a disguised grub. Grub then chains the renamed Vista bootmgr or NTLDR as required having done the necessary hiding/unhiding first.
While we wait for CG to examine the implications of what seems to be a RAID/grub bug, there is something you can do to get the desired end result.
Edit the menu.lst to remove the find remap and find set lines from the XP entry and replace them with a simple
root (hd0,1)
before the makeactive and chainloader /ntldr lines.
When you select XP from the HnS menu, if it doesn't boot successfully into XP, try again but this time use the "e" option on the HnS splash menu page to enter edit mode
Go to the root line of the XP entry, position the cursor on the 1 in root hd(0,1) and hit "tab" and it will give you a list of valid partition numbers. Choose the correct value for XP, make the change and hit "b".
When you know what the correct value is (if 1 is not correct), make the change permanent in menu.lst.