Really glad to hear that the last poster was able to negotiate and got his old job back at the same grade level with a salary increase - well done Sir!! All the shenangians that took place to "fill" his position proves that management does not know what they are doing - they are clueless and do not value the work and responsibilities of the current employee. They did not speak up to support the employee and justify his position. This is one of the key issues here - the wrong employees are being laid off because management made the wrong decisions!!
In most cases, you are given 1 month to look for an internal position before the deadline (usually 1 month after your notification date). If you don't have any solid offers on the table before the deadline, you'll told to get ready to leave and you are done!! In some cases, you might be given a short extension so you can complete the interview process for a job you'd applied for.
I agree that the 2 year wait period is designed to prevent people from double dipping like the good old days (take the package then come back as a consultant with a much higher rate doing the same job). You have to keep in mind that the majority of the folks that's been laid off was not by choice, they were s*rewed because his/her manager made the wrong decision. Once you are on the outside, the chances of coming back is very slim - unless you are doing sales then you can come back any time you want.
Good luck to you all!