A lot has been written as to why Hillary Clinton is staying the race. Opponents of the Clinton nomination, ie. Senator Leahy (an early Obama support), keep calling for her to withdraw. But Hillary stays the course.
I think that the Hillary camp firmly believes that there is a chance to win this. I think they believe that the Obama/Wright controversy has had some effect on the "magic" that was seen early on. Further, Hillary has shown that she can carry the big states that have primaries as opposed to Obama taking small states with somewhat left-wing-biased caucuses. Additionally, Hillary's people probably think that Obama will implode as revelations about his past keep coming forward.
If Hillary does sweepingly well in Pennsylvania, she might have a change to close the gap on both delegates and in the popular vote. Further, anything could happen between now and the Democratic Convention. I believe Obama's people and supporters would like to see Hillary leave the contest as an insurance policy against the possible implosion factor for Obama.
One problem that is sure to exist with Hillary staying in is the damaging effect of all the body blows. The longer that the two candidates fight it out, the more both become damaged goods that could sink their chances in the fall election cycle over John McCain. While the hardcore Democrats will almost always vote for their party's candidate, the moderate Democrats and Independents could be influenced to vote against a Democrat and for McCain because of all the bomb throwing between Hillary and Barack.
Hillary's chances looked a helluva lot better before her Bosnia-buffoonery. She was doing well in the polls against Obama following the Reverend Wright expose. Now, in terms of the Democratic nomination, the polls are showing Obama up and Hillary back down; so, its hard to tell how much damage Hillary's shoot-herself-in-the-foot Bosnia lie has had on her chances.
For sure, Obama's Wright-wrongs and Hillary's Bosnia-fiction has given McCain a leg up in the general election. For once, the saying "it ain't over till it's over" is as true as it will ever be!