Per the NY Times (subscription probly. required but at least they have permalinks now):
After a years-long dispute, Microsoft and the computing and education project One Laptop Per Child said Thursday that they had reached an agreement to offer Windows on the organization’s computers.
Microsoft long resisted joining the ambitious project because its laptops used the Linux operating system, a freely distributed alternative to Windows.
The group’s small, sturdy laptops, designed for use by children in developing nations, have been hailed for their innovative design. But they are sold mainly to governments and education ministries, and initial sales were slow, partly because countries were reluctant to buy machines that did not run Windows, the dominant operating system.
Education ministries want low-cost computers to help further education, but many see familiarity with Windows-based computing as a marketable skill that can improve job prospects.
“The people who buy the machines are not the children who use them, but government officials in most cases,” said Nicholas Negroponte, founder of the nonprofit group. “And those people are much more comfortable with Windows.”
The initial run of child laptops will use Windows XP, as some of the protoypes exploded into small heaps of gears and fused chips upon the introduction of Windows Vista's 50 million lines of code.
