Murray Sargent said a bit about the meetings with Knuth in several posts in his Math in Office blog, the most interesting of which is http://blogs.msdn.com/b/murrays/archive/2006/11/15/lineservi...

The Tex-based algorithm for formula layout used from Office 2007 on is documented in http://www.ntg.nl/maps/38/03.pdf (some of those links have fallen to linkrot).