One Laptop Per Child, the effort to put technology in the hands of third-world kids, has lost its number two guy Walter Bender, who was president, software and content until last month when he was shifted to head of deployment although not many of OLPC’s novel Linux-based XO machines have been getting deployed.

Bender, credited with building OLPC, has now reportedly gone off to develop XO’s icon-based Sugar GU interface – meant to be an intuitive educational tool – and port it to other species of Linux besides the Red Hat Fedora operating system XO uses.

Meanwhile, OLPC mastermind Nicholas Negroponte has similar ideas only his involve moving XO to Windows with Sugar on top, which may be why Bender resigned.

Microsoft has been working for the better part of a year to squeeze a cut-down version of Windows into XO’s tiny memory and Negroponte said Tuesday he expects a dual-boot option for XO.

Windows is going to add to the cost of what was supposed to a $100 laptop and is now, even without Microsoft, a $188 laptop. Many third-world government, however, haven’t signed with OLPC because XO isn’t Windows and Intel’s rival Classmate is.

Negroponte told the AP that “an overriding insistence on open source had hampered the XOs,” that Sugar “grew amorphously,” and that it “didn’t have a software architect who did it in a crisp way,” leaving out Flash, for instance.

“There are several examples like that, that we have to address without worrying about the fundamentalism in some of the open source community,” he is quoted as saying. “One can be an open source advocate without being an open source fundamentalist.”

On OLPC’s community site Negroponte described Sugar as “a very good idea, less than perfectly executed” and attributed it to “unrealistic development goals and practices.”

“Our mission,” he said, “has never been to advocate…pure open source” but to “reach the most children possible…For this reason, Sugar needs a wider basis, to run on more Linux platforms and to run under Windows.”

It “needs to be disentangled. I keep using the omelet analogy, claiming it needs to be a fried egg, with distinct yoke and white, rather than having the UI, collaborative tools, power management and radios merge into one amorphous blob. Otherwise, it is impossible to debug and will be limited to the small, albeit growing, world of the XO hardware platform.”

Bender is the third executive to leave the non-profit. Its CTO Mary Lou Jepson left in December to exploit XO’s battery and screen innovations followed by its director of security Ivan Krstic in February protesting OLPC’s “drastic internal restructuring” and “radical change in its goals and direction.”