Every rule has its exceptions, setting drupal_set_title directly on form_alter doesn’t work for node form title. To customize pages like “Add node”, or “Edit node” :

  • Make a module

  • Add a function to implement hook_form_alter

  • Add a form afterbuild in your hook_form_alter implementation: $form['#after_build'][] = '_my_callback_form_set_title'

  • In '_my_callback_form_set_title', use drupal_set_title to change the form title: drupal_set_title(...)

  • Update system table to have the weight of your module greater than Node module (on a default install, core modules are weighted 0, so set your module weight to 1).

  • Rebuild registry, clear caches.