It doesn't appear as though that functionality is present in the geoprocessing tool. If you were to use the "Use selected features" button, how would you have selected those features in the source layer? If you're selecting by attribute, you can simply add the Select By Attribute tool to the model before the Select By Location, then you can use the New Selection option for the selection type in the Select by Location tool. If features are selected before running a geoprocessing tool, the tool will only run on those features, so by having features selected from the Select By Attribute tool, you'll only use those features as the inputs for the "Selecting Features" parameter.
That might be a bit confusing, as the word "select" is in there about 100 times, but let me know if you need any more clarification.