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Currently, when "orion.project.defaultSCM" is set to "git" and you link to a folder under an existing git repository, a new repository will be created for that folder anyway. This is wrong, we don't want to play with nested git repos, do we? I'm aware that "orion.project.defaultSCM" is a short term solution, but I'll fix it anyway.
Fixed with http://git.eclipse.org/c/e4/org.eclipse.orion.server.git/commit/?id=b6385ab3a5022a910b57ffc8a32582edd2f5cdff.