He called her and when he did walk away from her apartment he knew....so all along Desmond knew....all the time he was on the island...Desmond knew....

96 Desmond was comming to 04. He got his memories back when he started to talk to Penny.

In FBYE, present Desmond ('04) travelled back; tonight, past Desmond ('96) travelled forward. I love the symmetry!

We've also seen present Desmond travel to the future, so will we see future Desmond ('07) travel to the past ('96) or present ('04)?

It believe it was 1996 Desmond coming to 2004 and going back to 1996. I wonder what happened to Desmond of 2004's consciousness. It's obvious that it was his 2004 body that would have died. Contacting Penny in 2004 brought his 2004 consciousness back. It was a fantastic episode.

I believe Daniel said they "fuse"...but I think Fused Desmond only had '96's Desmond's memories.

I think maybe both. I think the 94 Desmond came to 2004 and the 2004 Desmond went back to 96

I think Fused Desmond only had '96's Desmond's memories.

No, once he began speaking with Penny in 2004 (once he became "fused"), his memories of the island and his current circumstances returned -- he specifically says "I've been on an island", which 1996 Desmond would not have known about -- 1996 Desmond only knew about being on a freighter in 2004, not being on an island.

I'm still so skeptical about this fusing nonsense, though. It reeks of Neo being saved by a kiss...