From a wonderful diary up on Daily Kos:

This NPR piece speaks to the Republican funded cause that Obama and Ayers worked on together. And that:

"It was never a concern by any of us in the Chicago school reform movement that he had led a fugitive life years earlier," said former Illinois state Republican Rep. Diana Nelson, who worked with both Obama and Ayers over the years. "It's ridiculous. There is no reason at all to smear Barack Obama with this association. It's nonsensical, and it just makes me crazy. It's so silly."

First, Obama began working with Ayers and others (Republicans, Independents, and Democrats) at the Chicago Annenberg Challenge. Well, what is the Anneberg Challenge? Who is Annenberg? Well according to NPR,

The Obama campaign says he first met Ayers in 1995, when Obama became chair of the board of the Chicago Annenberg Challenge, a $50 million fund that awarded grants to groups trying to implement new programs to improve inner city education in Chicago.

Walter Annenberg, a lifelong Republican and former ambassador who was appointed by Presidents Nixon and Reagan, funded an ambitious program to reform urban education in many cities in the mid 1990s. Ayers was an important member of the group that developed and wrote the grant proposal to the Annenberg Foundation.

Second, there were people of all political persuasions working on this effort with this "terrorist" Ayers and who saw him as acceptable and Obama was no closer than any of the others.

...no one on the board or on the Annenberg Challenge staff remembers Obama being any closer to Ayers than to any other member of the board. The Annenberg board also included several civic, business and education leaders, many of them Republicans...

In fact one person close to the issue states:

"I don't remember ever hearing anyone raise concerns or questions or concerns about [Ayers'] background," says Anne Hallett, who has worked closely with Ayers on the Annenberg Challenge grant and with Obama on education and other community and legislative matters. "And that included everybody I was engaged with," including prominent Republicans, and corporate and civic leaders in Chicago, Hallett adds.

Oh, really?!

So not only was Obama working on a Republican funded initiative, but prominent Republicans were involved on the board with Ayers. Do they all hate America so much that they are "palling" around with terrorist? He had been in their midst for years, why did not the republican's run him out of town.

Obama was new to Chicago. He hadn't been elected to anything. He really did even know where the bodies where truly buried in Chicago (evidenced by the thumping he received when he ran for the state senate). He just wanted to serve the community and do good work. However, Ayers had been there for years, building a reputation that was so mainstream that a life long Republican, who was a former Ambassador appointed by Nixon and Regan, allowed the release of $50 Million to let him, prominent Republicans, corporate, civic leaders, and a Harvard trained community organizer form a board to oversee the disbursement of these funds related to school reform.

And finally, the author notes:

Hallett calls this attack on Obama's association with Ayers and the Annenberg Challenge by further association, "a smear campaign. It's a political diatribe that has no basis in fact. The Chicago Annenberg Challenge was an extremely positive initiative. It was well-vetted, thorough, and the fact that it is now is being used for political purposes is, in my opinion, outrageous."

And as noted earlier a former Illinois Republican state representative states:

"It was never a concern by any of us in the Chicago school reform movement that he had led a fugitive life years earlier," said former Illinois state Republican Rep. Diana Nelson, who worked with both Obama and Ayers over the years. "It's ridiculous. There is no reason at all to smear Barack Obama with this association. It's nonsensical, and it just makes me crazy. It's so silly."

I don't have a transcript. However the article provides the link to the audio.