Yes indeed, it does happen. Sara Ford posts about her team’s experiences moving their Power Toys over to CodePlex. It makes for good reading, and it enforces the fact that there are some smart folks at MS who are passionate about getting good software out for all to use, adapt, and contribute to.
Check out these pictures of her office window if for some reason you think she’s not passionate about MS embracing open source.
(And yes, I’m starting to pester her already about speaking at CodeMash!)