Augmentation p46 describes the built-in medkit as replacing the forearm. I take that to be a lower arm cyberlimb replacement, but on the following page on the cost index chart it lists it as a hand replacement. Is this a typo or do I not know what a forearm is?

I've always counted limbs as three parts.

Oh, and to your question: I dont know, I've always counted medkit as being a Hand Unit.

Shoulder/upper arm
Elbow/lower arm
Hand

This means that you can have

Obvious Arm Capacity: 15
Obvious Lower Arm Capacity: 10
Obvious Hand: 4

Upper Arm Capacity: 5
Lower Arm Capacity: 6
Hand Capacity: 4
Total Capacity: 15

This means a Modular Hand Unit would be 4 Capacity and a Modular Lower Arm Unit would cost 6 Capacity.

This gives a clear indictment on how much space would be left after a modulated bit is inserted and gives the player a lot of freedom if they want to have several arm pieces mixed.

Perhaps they meant that modular modifications shouldn’t cost any capacity but that in itself sound a bit strange.

Your breakdown is pretty much the same as I look at it. Unfortunately this is an area that just never got completely fleshed out, 3E was a little clearer regarding cyberlimbs in general (well not in the main book, but once the cyber book came out).

Where it breaks down for me is when a character buys a modular limb with enhanced attributes. Say a character buys a modular arm with 2 points of enhancements for strength, body, and agility and it has hand razors (total of 8 capacity used). Now he wants a spare swapable hand that doesn't have the hand razors so he can get past some tough scanners, but he still wants it to have the same stats as the rest of his arm (pretend both are already max customized, so ignore that option). Unfortulately the new hand only has a capacity of 4 so it can't fit the 6 poins of enhancements necessary to match the original hand, and thats even without the razors. So the characters extra replacement hand, which is exactly the same in every way as his original replacement hand, doesn't have the same capabilities.

Well then, just use the reference that lower arm modular items take up no space but replaces the limb between Elbow and Wrist so that no other modular item with the same location cannot be placed there – but you can still upgrade and use the space there.

Huh, whats that have to do with having two different cyberhands that you can swap between?