I think this is well known, but it goes without saying that Microsoft's recruiting is top-notch. I missed turning in my resume at the career fair, and so I emailed the recruiter for my school. He promptly replied and told me to apply online and he'll follow up.
I had a 30 minute interview on my college's campus for a full-time PM position. The person interviewing me was very friendly, making the interview pretty stress-free. I was asked two design questions. With any design question, make sure you first ask questions that help you define the problem. Then think of different types of people involved in this problem and figure out their pain points. Don't just jump straight into designing features. They want you to design from the users' point of view.
The recruiter then asked me to talk about my past experiences and why I am interested in Microsoft. I told them what teams I was interested in (Xbox/Kinect/Windows Phone).
I then received an email stating that I made the next round in Redmond. Microsoft was incredibly helpful in organizing my trip and replying to my emails very quickly.
My interview in Redmond was a great experience. In this round, you are with a group of about 12 people. You go out to dinner as a group the night before, and then leave to interview together as well. This made the interview process less awkward, and it was nice to have people to talk to.
The second round (and final) interviews consisted of four, 45 minute, interviews, with a 15 minute break in between. Some people received 2 rounds of technical questions. Luckily for me, I only had to answer design questions. I steered most of the conversations into explaining design decisions of my pet project from the summer.
After the four interviews, everyone in my group waited to be called on to here if we received offers or not, while eating boxed lunches. I ended up receiving an offer, and the recruiter told me exactly what I would be working on. I lucked out, and got exactly what I wanted. This is the nice thing about Microsoft's recruiting: you know exactly what team you are interviewing for.
I accepted the offer and am incredibly excited to start working at Microsoft.