Capping a comeback from a demotion in the wake of Hailstorm’s failure to survive a privacy challenge led by bloggers, Server and Tools senior VP Bob Muglia was promoted to President of the Microsoft group. Muglia now commands a Microsoft unit with some 22% of the company’s $60 billion in revenue.

Significantly, Muglia’s ascension puts him in a Gang of Four with Entertainment chief Robbie Bach, Office Business czar Stephen Elop, and Online Services Group newcomer Qi Lu. Windows and Windows Live round out the major divisions, but is led by a trio of senior VPs the most notable of which is former Office czar Steven Sinofsky. With Muglia now controlling Windows Azure, Live Mesh, and Silverlight, he sits atop the new Microsoft Web OS architecture from an operational perspective.

As a major player with power in both cloud and on-premise constituencies, Muglia has proven adept at surviving and prospering while the company goes through a disruptive and potentially damaging transformation. Steve Ballmer’s decision to solidify Muglia’s status after moving Muglia from a report headcount of 3,000 to 1 in 2001 also provides Chief Software Architect Ray Ozzie with a powerful ally. Muglia’s strategic assets (significant revenue and the ability to survive in the nation state politics of Redmond’s Windows and Office groups) are complementary to Ozzie’s command of the direction the company must take to avoid being marginalized by Google and its disruptive advertising model.

Note: Live Mesh is a finalist for the Best Technology Innovation/Achievement award at The Crunchies this Friday, January 9th in San Francisco.