Bloomberg says yes, Microsoft no: Reports yesterday were that Microsoft was planning a Christmas release of an "iPod killer" to compete with Apple's dominant music-playing device, with Microsoft's offering Wi-Fi file transfer without a computer being involved. Microsoft said today that they didn't demo anything, but didn't say that nothing was demonstrated.
Meanwhile, you can read about the Microsoft Windows Media Player 11 Portable Media Player Device Media Player Media Player Media Player at Crazy Apple Rumors Site.