Only fat free butter is allowed on the South Beach Diet because of the fact that it contains zero carbohydrates and fat, which is what this particular diet is trying to help people cut down on as much as possible. Those who are on a this diet though will want to consider how much fat butter has in it. While it may be true that butter has zero trans-fat, it still has quite a bit of fat in it which is obviously not ideal for those who are on a diet.
These kinds of fad diets usually emphasize lowering the amount of carbs you consume on a regular basis as well as saturated fats. Those who are on the South Beach diet will need to avoid butter unless it is explicitly fat free. Over consumption of butter can easily lead to backsliding on weight goals.