It appears it’s no longer included with the distro. You could probably get it from the author, here: http://www.michelf.com/projects/php-markdown/
I haven’t any idea if it will work with 2.0, though, sorry.
Thanks. This seems to work ok. I need to test this on a more extensive set of content, but my initial tests seem to indicate the markdown support works in 2.0.
That’s good to hear! If you could keep us apprised as you see how it works, that would be a great help.
Thanks for the update, and for changing the thread to “resolved”.
See my notes about Markdown and WordPress 2.0. In short: Markdown works fine, but you must disable the “rich” WYSIWYG HTML editor. Email me if you find any problem.