The Condition list (on an asset's General tab, or Maintenance Entry screen) is a drop down list only, which pulls the list of conditions from the database. It will not allow you to type into it to add new values.
To add more condition options, either Edit an existing asset, or open the New Asset screen, and type your new condition into the Condition box there. It will prompt for whether you want to add it to the database or not. After adding it to the database, Save the asset.

The Condition drop down list will list all conditions currently in use on assets, so if you need to remove one from the list, you will need to edit those assets that have it selected and change them to something else.