This can be done with a tablet PC hooked to a projector, running Microsoft Physics Illustrator, which is a free PowerToy for XP Tablet PC. The video appears to be using an input method similar to Physics Illustrator combined with a full version of Working Model 2D. Whiteboard input is a different matter, commerical solutions run $2,000, so a DIY method of mapping a pointer would be pretty useful. One method is heavy on math: camera and image processing. Another method is heavy on hardware: long rows of IR emitters and detectors along the edges of the board. The last method appeals to me for reasons of total cheapness: loops of string tied to the marker, wrapping around the board in X and Y planes and looping around a pair of optical encoders. Might require a servo on one axis, to move the other loop in order to keep everything straight. After that, you have to figure out how to get absolute position into the OS...Wacom tablets do it. Maybe use gear/pulley reduction and a real Wacom tablet and pen behind the scenes? It's a lot of fun to think about.

hmm....cool...i wish i had a tablet pc....kinda big though to carry around...

Mine is too big, and too heavy...4.5 pounds doesn't sound like much, but it's like carrying a cinder block compared to a normal paper notepad. Much smaller and lighter tablet PCs exist; when you can finally carry a pen-based computer with you all day and scribble notes, then it gets really useful.

oh yeah, that should be available in next couple years...

that looks so complex to learn, but would be so fun messing around with the physics.... kind of like line rider 103103013.0