I've been reading this thread, and I must say that both sides raise valid points. Sure, the guy has molested children in the past. No, I don't agree that placing him near a day care center is a good thing at all. Legally, however, he has the right, or else he would be forced to move, as much as I disagree with that. Seeing as he's able to live there, one could argue that he's using a loophole in the law to do it again.
I'm glad GooeyToast brought up the fact that it's a big deal in the town, and in the local media. That would/could give the guy leverage against his doing it again, at least until it died down.
As to the moralily side of the debate: One of the things that frustrates me the most about American society is that some people get scared and jump to conclusions far too easily about stuff they see on the media. Yeah, bad stuff happens, but the world isn't a total poophole because of it, and not everyone is evil. When they see enough media stories about killers and whatnot, they get scared of other people in general, because they thing that criminals are so common that they must be absolutely everywhere. In this particular case, however, I agree that it's a valid reason for parents to be afraid. It's like bringing a psychopathic serial killer in a busy residence and letting him live completly unsupervised, people should be scared of that as it's a real, unimagined threat. If I was a parent, I'd be cautious of leaving a kid at the day care center.
I, however, don't think child molesting is on quite the same level as murder. Sure, the kids that are victims may suffer horrible phychological damage, but the basic life essence hasn't be taken away...they're still alive and breathing. The guy shouldn't be allowed to live near a large place for kids, but I don't think people should harass him or put any sort of signs on his door. I think the time he served is big enough punishment for him, and the people in that community should instead put their energies toward doing whatever is best for their children.
Lastly, I don't know any statistics...but I think that if a sex offender really wanted to change, he/she would. Saying that every one will repeat their offenses is a pretty broad generalization, I think.