Express Computer has published an interview with Nabeel Youakim, Citrix's area vice president of their global Microsoft relationship. Youakim talked about Citrix's relationship with Microsoft and competition from Terminal Server and Linux products.
When talking about their relation with Microsoft, Youakim pointed out that Citrix has "a development team in Redmond." The editor's of Express Computer added the words "Microsoft's headquarters" in brackets after that, furthering the rumor that Citrix has developers at Microsoft's headquarters. In fact, Citrix has developers in the city of Redmond, not at the Microsoft headquarters. Citrix execs like to say "we have guys in Redmond." People hear that and think it means at the Microsoft headquarters, but in fact it doesn't.
When asked about whether Terminal Server is a competition to Citrix, Youakim goes on to say "that's what some people believe." Does Terminal Server compete with Citrix? Make your own decision based on the facts.
The interviewer also asked "Couldn't Microsoft pave over Citrix any time it wants?" Youakim skillfully dodges the question, providing an answer about why Microsoft would never buy Citrix. Of course Microsoft would never buy Citrix. If Microsoft wanted to enter the Citrix space, why spend that money when they could write the products themselves? (Of course in this case Citrix's biggest protection is probably the DOJ, and a good reason for Microsoft to keep Citrix strong.)
There are several other enlightening statements from Youakim, and I highly recommend reading the whole interview.