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I really think that the first step would be to put all this information together.
Let's see how fast we can be...
This is apparent because they have given pride of place to the "near you" option right next to search.
What does this mean?
Well for the moment as others have pointed out if you want to do well with searchers in a particular country (ie using a particular version of MSN) you better have your web site hosted on a server in that country. Because the the only trick MSN is using here is a look up table based on your server country.
Why is this wrong?
Well only partially wrong, if for example you are looking for a plumber then results from your neigbourhood are perfect.
If on the other hand you are looking to go on holiday abroad then the web site most relevant to you will most likely not be in your home country.
And last but not least if you are just looking for the best of the bunch again you don't want to be limited to people who host in your country.
So..MSN....this geo targeting should be AN OPTION for the searcher and not THE BASIS of the search.