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That is correct.

This what the original article written on November 5th states:

“Obama met with Governor Rod Blagojevich earlier this week to discuss it. Illinois law states that the governor chooses that replacement.”

This is what the clarification states:

“The story housed in our website archive was on the morning of November 5, 2008. It suggested that a meeting was scheduled later that day between President Elect Obama and Illinois Governor Blagojevich. KHQA has no knowledge that any meeting ever took place. Governor Blagojevich did appear at a news conference in Chicago on that date.”

Sneaky little ones, aren’t they?

I don't know if this has already been cleared up - I don't have time to read through this whole thread -, but this is from Little Green Footballs (here):

Obama Did Discuss Senate Seat with Blagojevich - Update: KHQA Pulls Their Articles

Politics | Wed, Dec 10, 2008 at 11:00:02 am PST

Barack Obama has denied ever discussing his Senate seat replacement with Illinois Governor Rod Blagojevich.

But that was apparently not true. A November 8th article at the KHQA website reports:

QUINCY, IL — Now that Barack Obama will be moving to the White House, his seat in the U.S. Senate representing Illinois will have to be filled.
Obama met with Governor Rod Blagojevich earlier this week to discuss it.

(Hat tip: JammieWearingFool.)

UPDATE at 12/10/08 11:17:50 am:

Another KHQA article on the meeting, from November 5th: Who will fill Obama’s senate seat?

CHICAGO, ILL. — Now that Barack Obama will be moving to the White House, his seat in the U.S. Senate representing Illinois will have to be filled.
That’s one of Obama’s first priorities today.
He’s meeting with Governor Rod Blagojevich this afternoon in Chicago to discuss it.

UPDATE at 12/10/08 11:48:08 am:

And at the Illinois Government News Network, an announcement that the meeting took place and the Senate seat was discussed, with the headline:

Governor Blagojevich Congratulates President-elect Obama and Discusses U.S. Senate Seat

UPDATE at 12/10/08 12:21:23 pm:

Curiouser and curiouser. KHQA has taken down both of their articles about the meeting, with no explanation.

UPDATE at 12/10/08 2:30:04 pm:

KHQA has now issued “a clarification:”

The story housed in our website archive was on the morning of November 5, 2008. It suggested that a meeting was scheduled later that day between President Elect Obama and Illinois Governor Blagojevich. KHQA has no knowledge that any meeting ever took place. Governor Blagojevich did appear at a news conference in Chicago on that date.

However, there’s still no explanation for why they reported on November 8th that the meeting had taken place.