A nice read, if you have the time, of why this is such a bullshit issue.
A few examples of the silliness they're attempting to scare voters with:
LIE: "Barack Obama is friends with Ayers, defending him as quote 'respectable and mainstream.'"(American Issues Project ad, August 2008)
TRUTH: David Axelrod described them as "friendly," not friends. Obama didn't call Ayers respectable and mainstream (although Ayers now is); Obama's campaign on his website posted an op-ed in the press that described Ayers that way.
LIE: "They live half a mile from William Ayers, the unrepentant terrorist" and "Just a half a mile from those homes is Louis Farrakhan."(Hannity's America, October 5, 2008, "Obama and His Friends: History of Radicalism")
TRUTH: It's true, of course, that Obama lives in this same neighborhood, as do tens of thousands of other people who presumably are also guilty by geographical association. The logic of this argument would be, if you live half a mile from a sex offender, then you agree with child molesters.