Indigo is written predominantly in C#. Various bits of Avalon are in some variant of managed code too, again I suspect it's C#, but it could be managed C++.

I believe it's already been stated that .NET will be included in Longhorn. Since it's already part of Server 2003 and required for IIS, which will presumably still be in the 'pro' version, I don't see how they can leave it out.