I think taking the software down is a very boding/bodeable/bodeful/whatever thing to do.
I completely agree. The guy who posted the original story was just wrong to say it "doesn't bode well".
By saying that, he was basically condemning Microsoft's actions before they'd even done then. I dislike MS as much as the next guy here, but - please! - what have they done in this case to warrant not boding well? As soon as they found out there was a potential problem, they pulled the software so they could investigate. Absolutely the right action.
What would you have preferred them to do? The only two other options were (a) ignore the problem, and (b) release the code. Ignoring the problem was clearly never going to happen -- even MS isn't that arrogant. And while I'm sure we'd have loved them to have just released the code, they would certainly need to check it first, because there's a very high probability that it also contains code which is licensed in a way that can't be released (especially since this is a DVD tool). So pulling it while they investigate is the right thing to do.
The most likely scenario I would suggest is that MS will re-launch the tool in a few months with the GPL parts replaced so they don't have to release any code. Not what the masses of slashdot would want, but likely to be the most sensible and pragmatic way for MS to deal with it.