Rob Fahrni is getting recruiting calls from MS, but it seems that the groups in question want him to relocate. This is a tough problem for a company, and it's one the Smalltalk group here at Cincom faced early on.
When Cincom acquired VisualWorks in 1999, most of the development staff was in the San Francisco bay area. We had a couple of remote workers, but that was an anomaly. Immediately, we had a California based group, a Cincinnati based group, and a few people outside those areas. Then we had the opportunity to hire some staff, and we were presented with a choice - try to get people who would relocate (to Cincinnati or CA), or try to get the best people we could, regardless.
We went with the latter decision. It's not without costs - communications are less immediate, although we make good use of conference calls, IRC, and IM. On the other hand, we have people doing great work for us that never would have relocated. I think the pressures against relocation, which have been steadily building for years now, are only going to get stronger. If you have a family - especially if you have kids in school - uprooting them to move to a new job is a huge step. Fortunately, it's not a step anyone in our group was forced to consider.