You CAN enter the medical expenses in both sections, as your 10% penalty exception AND as your medical expenses in Deductions & Credits section. As TexasRoger correctly specified, data entry for 10% penalty exception only reduces the amount of the penalty, but your distribution is still subject to ordinary income tax. Entering your medical expenses under Deductions & Credits will reduce that ordinary tax.
Also, per IRS: "You can only take into account unreimbursed medical expenses
that you would be able to include in figuring a deduction
for medical expenses on Schedule A (Form
1040). You do not have to itemize your deductions to take
advantage of this exception to the 10% additional tax."
