Via Bruce Schneier, this piece does a good job explaining the process that names go through in getting on the list, and distinguishing between the various watch lists, selectee list, and no fly list.

Schneier catches this bit of stupidity from the article:

If a person on the no-fly list dies, his name could stay on the list so that the government can catch anyone trying to assume his identity.

… and adds:

But since a terrorist might assume anyone’s identity, by the same logic we should put everyone on the no-fly list.