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I was given several different answers from different people. Here is a reply to an email asking about the code I sent to (sales@microworkz.com)

• Mr. Malda,

  Thank you for your interest in Microworkz.com. The iToaster operating system is a hybrid between BeOs and Linux and is licensed and patented by Microworkz.com, Inc. The source code is therefore proprietary and not available for download.

  The Linux pure source code is however at www.linux.com.

  If you have any other questions or if you would like to place an order, please give our Sales Team a call at (888) 306-2044 from 7am - 8pm Monday through Friday and 10am - 5pm Saturday and Sunday PST. Or simply check out our web sites at www.microworkz.com.

So I called them and asked more. I talked to a very nice gentleman who put me on hold for awhile while he found answers. According to him, the iToaster does not run Linux (although according to the email posted above from the sales department, it runs "A Hybrid between BeOS and Linux". This is sorta what the MSNBC article said ("The way it was explained to me, BeOS handles the file system, while Linux does just about everything else.")

So I guess there are 2 possibilities here:

1. Microworkz messed up by using the word "Linux" when dealing with CNNfn and MSNBC, as their machine does not run Linux at all. This seems to be what I was told on the phone.
2. Microworkz is violating the GPL by making modifications to the Linux kernel and not releasing them.

At this point there really isn't much we can do about it since the iToaster isn't really out so we can't do any pounding on it to determine if their is something questionable going on.

Thanks to the many of you who wrote in to give us the heads up on this. We'll keep you posted if we figure out more.