Late 2009. Possibly Oct-November to compensate for the lack of a new PGR game.

The only issue with assuming FM3 will sell better due to FM2 bundling might be wrong - FM1 was bundled with the Xbox. We saw how fast FM2 sold because of that.

However, a non-bundled FM3 could sell 2-3m if it was placed at the right time of the year. MS unfortunately put FM2 in May, which starts the slow period.

Using the "Xbox only had 1 Forza, so X360 will only have one" are missing the fact that FM1 came out very, very late in the Xbox lifecycle. I'd anticipate that we'll see FM3 on the 360.

 That would reek of EA tactics and probably make it a tedious title. Why bother? When it comes to the simulation games on consoles, the effort and time required is tremendous, so hastening development would seriously hamper the quality or maybe even maim the entire series.

How long between the original and FM2?  

 I think they do need to, to keep the franchise vitalized. GT has been made in 2 installments on the PS brand, for instance. And like Stickball said; FM2 came out a lot earlier in the 360's life than FM did in the X-Box's life, so I see the need for releasing one more title to "keep the food warm" so to speak.

Not only that, but with the PGR series becoming a shadow of it's former self, MS needs a new uber-racer IP.

And Forza is just that.

Anytime after GT5 is released, they will need the extra time to try and trump what GT5 has brought to the table.

Surfer Girl says 2009

http://softrockhallelujah.blogspot.com/2007/10/two-quick-exclusives.html

I think sometime Fall of 2009. Forza Motorsport just released last year (2007). I think Turn 10 (developer) is preparing the development of the game now and will show some trailers sometime this E3 or at TGS 2008.

i say at the end of 2009 (september or october)

2009 id say, since pgr is a goner.