Hi Alan,
Windows Workflow Foundation (WF) will be released as part of .NET Framework 3.0, which will be available under the Windows licensing. So, as long as you have a validly licensed copy of Windows XP, Windows 2003 Server, or Windows Vista, you would be able to install the .NET Framework 3.0 runtime components (WF included) free of charge on that machine.
Essentially, this is the same model as you know today for .NET Framework 2.0.
Hope that helps.
Anna Lidman - MSFT
Lead Program Manager | Connected Framework (WCF, WF) | Community & Release Mgmt |