Here's a New York Times article which traces the "Obama is a Muslim" rumors back to 2004, shortly after Senator Obama delivered his star-making keynote speech to the Democratic Convention. This Andy Martin first posted his suspicions on FreeRepublic, which could be called a "paleo-conservative" website. That seems to be part of a pattern through which the rumors developed independently of the Republican establishment, and not necessarily consciously to its benefit. Two details of interest: Martin is said to have spread rumors about George W. Bush using cocaine before the 2000 election, while Ted Sampley, a provocateur who further publicized the Obama rumor beginning in 2006, has also called Senator McCain a "Manchurian Candidate." Sampley is one of those who hate McCain for supposedly betraying Vietnam veterans allegedly left behind in POW camps.
Another peculiarity, or irony if you prefer: while some think the Muslim rumor is meant to scare Jews into voting against Obama, Martin appears to be an anti-Semite himself. All of this may help explain McCain's dismay when confronting the haters at his own rallies last week. The fearmongering about Obama appears to be a genuine grass-roots phenomenon from outside the establishment. To me, that makes it scarier than ever.