A post at the Victory Fund's blog citing another blog citing an "RNC source" says many in John McCain's inner circle wanted Secretary of State Condoleezza Rice as his running mate, but rumors about her sexual orientation complicated matters.
There is nothing conclusive here. No one is on the record. For me the bottom line is that if she doesn't publicly identify as a member of the GLBT community, then I don't see much point in talking about her sexual orientation.
The real take-away from this minor flurry is how little public discussion there really was about Rice as an option. And that's a shame. Despite the fact that she would have been a constant reminder of the Bush administration, it's hard to think of a brighter, harder working official of her rank and experience. The debate between her and Joe Biden on foreign policy would have been electrifying.