Here's a block diagram of the GUI, which was filed as part of the patent.
Microsoft's Web phone interface, from its patent application (click to enlarge image)
As for the underlying software, it's described as follows: "A software platform of the user interface provides a set of default user interface features and exposes an application programming interface. System implementers may customize the default display elements or create entirely new custom panes that fit within a uniform user interface framework using the application programming interface."
Here's the patent's block diagram of the software flow:
Software block diagram, from Microsoft's patent application (click to enlarge image)
If it ever comes to a court contest between Microsoft and Apple, Apple could point out that, although Microsoft's patent was awarded on May 29, it was actually first filed on August 25, 1999. That makes it sound old. On the other hand, Microsoft could conceivably claim that it thought of the concepts behind the iPhone almost eight years ago.
Indeed, a close reading of the patent application shows some very broad claims, which read very much like some of the things being done by the iPhone. Take claim 32, for example.
It reads: "A method of creating a customizable visual user interface for a telephony device with a screen display, the method comprising: providing, on one or more tangible computer-readable media, software comprising computer-executable instructions for customizing the customizable visual user interface, the customizable visual user interface comprising a branding area for displaying a brand graphic, wherein the branding area is operable to allow a user to connect to an internet location via the telephony device, and wherein the internet location is associated with the brand graphic; wherein the software for customizing the customizable visual user interface comprises at least one application programming interface comprising one or more methods for adding one or more custom panes corresponding to a parent application to the customizable visual user interface…."
Sounds iPhone like to me. Given Microsoft's history of litigation, if I were Steve Jobs, I would pick up my iPhone and call my lawyer.