Microsoft had given the check to Linux consultant Michael Chaney of Nashville, Tenn., who bailed the company out by paying its $35 domain name fee.
Chaney listed the check on eBay on Jan. 17, pledging to match $2,500 on the condition that the money be used for charity.
The check drew little interest at first, but in the past few days, bidders had been actively competing for it.
As with most auctions, the 10 minutes before the closing bell proved the most active, with John Corrigan, founder of Portland, Ore.-based SwiftView, and Penny Stroud of Stanford, Calif., jockeying for the check. Stroud wanted to donate the money to the Cystic Fibrosis Center at Stanford University.
Corrigan, 51, won the contest with a final bid of $7,100. He said he will donate the money to a soup kitchen called Sisters of the Road Cafe, also in Portland.
As for the Microsoft check? Corrigan said he would follow Chaney and again put it up for auction along with his canceled check.
"It appeals to me that a good deed can keep on going," he said. "I could just frame the Microsoft check and put it on the wall, but I'd rather do the same thing Michael Chaney did and have it keep going."
The episode began Christmas Eve, when Chaney was denied access to his Hotmail account.
He learned through Slashdot, an online discussion group, that Microsoft had an outstanding $35 fee to Network Solutions (NSI) for the Passport.com Web address. The Passport site verifies user identification and passwords for access to Hotmail and about 25 other Microsoft services.
Chaney, 31, quickly paid the fee with his credit card, restoring service to Hotmail users.
Microsoft representatives have said that the fee was an oversight on the part of NSI.
Diane McDade, Microsoft's public relations manager, said the company bought the Passport domain early last year and unknowingly inherited the $35 outstanding fee.
NSI generally notifies Microsoft when one of its several hundred domain names are about to expire. Somehow, the registrar did not acknowledge Passport as a Microsoft Net address, McDade said.
Representatives for NSI could not immediately be reached for comment.
Regardless of who was at fault for the error, Chaney points to it as a good example of "how a small oversight can lead to big problems."
"It's also an example of how a loose bunch of people working together can solve the problem pretty quickly," he said.