This bug during SQL 2008 Failover Cluster setup on Windows 2012 is documented here. With this bug, the radio button to choose "Use service SIDs" is completely missing.
The workaround is to continue forward with the setup dialogue without making any selections. This causes setup to default to using Service SIDs.
Thanks to Prashant Kumar for this solution. I have also verified this workaround is good.
There are three additional steps to perform when installing SQL Server 2008 on Windows Server 2012. Please see this post for all three additional steps.