If you're interested in learning more about the federation features in Search Server Express then head on over to MSDN and check out these articles;
Federated Search Overview
Architecture Guidance for Building Federated Search Connectors
Federated Search Connector Sample (for federating to SQL Server)
Creating a Custom Federated Search Web Part with a Credentials UI
Location Definition File Schema Reference
OpenSearchDescription
We also have several Discussion Forums for questions and advice (including one on federation);
Search Server Express Forums
Report a Bug Known Bugs and Workarounds Frequently Asked Questions Feature Requests Installation, Configuration and Administration Developers and Customization Federation
Report a Bug
Known Bugs and Workarounds
Frequently Asked Questions
Feature Requests
Installation, Configuration and Administration
Developers and Customization
Federation
Richard Riley Senior Technical Product Manager Microsoft Corp.
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Are there any known issues with nested group permissions in Search Server 2008 beta. For example creating a local file access group on the server and adding AD domain groups to that local group.