I believe that "interpretation" comes from apparently coincidental post blog by a MS employee from the SQL Server team that watched WinFS flounder.
So it would seem there are at least two interpretations of how WinFS was interpreted within MS.
WinFS touched upon so many technologies that I can understand that those that worked on each chunk of it emphasized their particular piece of the pie when discussing it.
As an outsider, it was pretty clear to me what WinFS was; like PaoloM said, all those things.
.NET was originally pictured as the new API for Windows, a replacement for COM, and just as WPF was meant to be the Presentation API, WinFS was meant to be the Storage API. Of course, like all of .NET, that meant making it updated, modern, object-oriented and glued into technologies becoming standard to .NET, including SQL and XML. XML would be the way metadata would be handled, because it would allow it to be self-descriptive. LINQ/SQL would be used to allow the user to traverse files based on metadata rather than physical location.
For the press and the masses, this was often boiled down into saying "instant network wide search based on various metadata" because that would be one of the most practical uses of it.
Some of the technology from WinFS has survived in other forms, but that doesn't mean WinFS is still alive, they just picked bones from its corpse.