Yes, it will handle most Canon and Nikon models. Here's a full list:
The software supports the following image types:
Canon EOS RAW images (.crw, .cr2, .tif)
Nikon Electronic Format images (.nef)
Bitmap images (.bmp)
JPEG images (.jpg, .jpe, .jpeg)
Windows Metafile images (.wmf)
Tagged Image File Format images (.tif, .tiff)
Graphics Interchange Format images (.gif)
Portable Network Graphics images (.png)
Supported camera models include the following:
Canon EOS 1D
Canon EOS 1D Mark II
Canon EOS 1D Mark IIn
Canon EOS 1Ds
Canon EOS 1Ds Mark II
Canon EOS 5D
Canon EOS D30
Canon EOS D60
Canon EOS 10D
Canon EOS 20D
Canon EOS Digital Rebel (300D)
Canon EOS Digital Rebel XT
Canon PowerShot G2
Canon PowerShot G3
Canon PowerShot G5
Canon PowerShot G6
Canon PowerShot Pro1
Canon PowerShot s30
Canon PowerShot s50
Canon PowerShot s70
Nikon D1
Nikon D1x
Nikon D2H
Nikon D2Hs
Nikon D2x
Nikon D70
Nikon D70s
Nikon D50
Nikon D100
Nikon D200
Nikon Coolpix 8800
Nikon Coolpix 5700
Note that other models of cameras may work, but have not been explicitly tested by Microsoft.
For a more detailed explanation of what it can do you can download the whitepaper
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