Some of the cheaper ones uses a projector mounted above the board. Johnny Lee used the Wiimote to create an even cheaper smart board.
I haven't used a smart board with the same technology but I guess the constant shadow by the operator would be annoying for all involved. Rear projection is a possibility but it requires a lot of extra space and an additional sensor in front of the screen.
Enter Microsoft Surfaces - a similar setup with a frosted glass plate embedded into a table with the projector and a Wiimote under the table makes a lot of sense. It will both save a lot of space and make interaction between meeting participants easier.

The most expensive item (apart from the computer) would be the projector.
A full version would probably use some custom hardware rather than a wiimote. Extra environment brownie points for an integrated battery charger for the IR pen are available :-)
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