Here are more details on how the X-Prize foundation raised the remainder of the money. Apparently they did an insurance bet. They found an insurance company that was willing to take the bet that no one would win by the end of 2004. They had to put up what they'd raised already (about half, I think).

The only problem with it is that if no one wins, all the money evaporates on the first of January, 2005. That wasn't the original goal--it was supposed to be open ended as to time, I thought. But at least the money's in the bank now, and I think it likely (and certainly hope) that the insurance company loses.