I second Watin! I’ve shown it to our testers and actually got them interested in automation.
@Frans - I think this is another area where you and I will disagree. Open Source projects need financial support if they ever hope to grow past a certain point. Most projects can limp by for a long time on sheer volunteer effort, but at some point in their evolution they reach a size that just cannot be managed on a purely volunteer basis. They require some sort of financial support to be able to pay for the services they need to keep running. That may mean increased bandwidth or increased server capacity, even monetary support to pay for legal fees, or maybe it is just a few extra bucks for the developers to be able to reward their wives for putting up with all the crazy hours that they do.
Having worked for several years in the Java world I am very familiar with the OS model there. Even in the Java camp, the most successful projects recieve some sort of support. Sure NHibernate may only have one full time staff member, but I would be willing to bet that if they needed another server tomorrow to host their website, they probably wouldn’t have a problem getting it. If they wanted to get trademark protection for their brand, the funds would be available for the legal fees.
Java did not spring from the ground with a full Open Source community ready to write code. It evolved because of some early projects which became successful and paved the way for other projects. You had people like Marc Fluery who did a ton to promote Java Open Source and fought tooth and nail with Sun in order to get Sun to certify the JBOSS Application Server. IBM spent hundreds of thousands if not millions building and promoting Eclipse, even while fighting Sun over the SWT. The Open Source community did not thrive on Java because of Sun but in spite of Sun. It even took a long time for Sun to open up to the Java Community Process.
Given the history of Open Source in the Java world, why would we think Open Source on the Microsoft world would be any easier, or would not require financial support, when clearly it required tremendous financial support in the Java world.
$2500 is probably not going to make a tremendous difference today. But it might be just enough to keep the lights on for a project a couple more months. It might be enough to give the project a little more breathing room until they can finalize a proposal to land a services contract. It might mean that a developer can afford to incentivize a tech-writer to create some good documentation. When you are on an open source project, every little bit helps. Even for a project the size of DotNetNuke.
+1 to Castle and nHibernate
Another vote for the Mono Project to support their development of porting Silverlight to Linux 
Some very interesting open source projects out there. Thanks for a list. A few I had not heard of yet!
Projects I use…
+1 iBatis.net (More people need to check this out… It ROCKS!)
+1 log4net
+1 MyGeneration
+1 WiX
CruiseControl.Net
What an small slice for FileHelpers:
We help a lot of developers and companies to avoid the pain of flat file handling, we want to create a full open source solution to exchange data in flat file format between applications, and some motivation is really needed.
A description from the site:
“You can strong type your flat file (fixed or delimited) simply describing a class that maps to each record and later read/write your file as an strong typed .NET array”
Thanks a lot to you and MS for this change
Marcos Meli
Open Source Developer
FileHelpers
MbUnit and Rhino.Mocks
No doubt the two most important open source tools I use every day.
+1 Castle
“In fact, I’ll go even further-- I think it must change if Microsoft wants to survive as a vendor of development tools.”
Do we really want it to survive? We should be putting our money behind open-source projects that support open-source projects, not Microsoft. What the open-source community should really be supporting isn’t some framework that only Windows users can use, but PORTABLE projects across several operating systems, including Linux, Windows, MorphOS and Amiga. So, if your going to throw your money at a group for a particular programming language make it REBOL. Make it Perl. Make it Scheme. Make it any portable programming language. Not .Net. Not C#. Not Visual Basic. Not Visual C++.
Let me disagree with u a bit.
The money is very important for a lot of developers, if some open source developer get a donation sure it will work hard to release versions oftem or to support user faster.
Is very frustrating give suport for free and dont get a thank u after solve the other problems (check some cases here http://www.filehelpers.com/forums )
Anyway I love what I do, but I do some freelance work apart of my daily job, so if I get a donation I can invest some more time with my project. At the end, is all about money 
and M$ know it.
Best Regards
Subsonic!
SubSonic!!
Another vote for SubSonic. I work with a small crew with a lot of demand and this project has made our work life a WHOLE lot easier.
The team is great and very responsive to issues and questions. I couldn’t think of a better project to nominate for this.
In Order:
SubSonic, SharpDevelop, NAnt, MbUnit
+1 CruiseControl.NET
+1 SharpDevelop
But above all, +several thousand for the Mono project, for making .NET live up to its potential.
My vote is for…
SubSonic (and/or the Commerce Starter Kit)
BlogEngine.Net (this counts as the “up and coming” project right?)
or dasBlog
Castle Project
Some people say blogs shouldn’t count (only development tools should) but I disagree. I’d like to see the non-.Net people benefit from some of this. I want to see a Java developer running a .Net blog, for instance.
I would also like to anti-vote for iTextSharp. It’s more of a port from iText than a C# equivalent. I mean it doesn’t even follow naming conventions. It’s also a pain in the ass with which to work. Boo to iTextSharp.
Microsoft money going to the Mono project would be very interesting.
side note - I’d suggest using wufoo.com to gather the results. maybe for the final round after you break down the most popular projects?
They offer an easy and free form tool for stuff just like this.
It would help you from wading through the comments to tally the votes, but then again comments are good for a discussion…so yea.