I have been on long-term disability from my job two years. I no longer have a position at the company, but am still an employee with the status 'on leave'. Now that I am ready to return to work I have to find a new job as an internal candidate, or look outside the company. I consider this a full-out job search and am brushing up on MT guidance.
My disability was due to Bipolar disorder and included 9 months of hospitalization. I obviously won't be sharing that kind of detail, but what should I include in my resume, cover letter, and eventual interviews?
Resume: My resume currently shows work history ending April 2010 when I went on disability leave. Any suggestions on whether I should indicate my continued employee status after that month? My company is a large, well respected employer, so I think it would help to somehow say I am still affiliated with them.
Cover Letter: Is my cover letter the place to explain my long employment gap?
Interview: My current thinking is to address the question by energetically saying, "I was on long-term medical leave, but I'm better now and ready to return to work.
Any suggestions are appreciated!

How to Handle a Long Disability Leave in Job Search
If you haven't already done so, I would suggest doing a search on Manager Tools on the word "resume", and go through the wealth of guidanace Mark and Mike give on resume preparation. The "Interview Series" also contains outstanding resume guidance.
I would agree with your approach above.
As a hiring manager, your response wouldn't change anything about what I ask you. The same behavioral questions: "Tell me about a time when...", would still apply. I might ask if there are any restrictions in your schedule, work location, hours, or tasking that I need to be aware of. But I generally ask that of anyone.
Best of luck!
John
Does this put you at an advantage?
I don't see how the long-term disability can be interpretted as a reason for reading your resume.
The purpose of the cover letter is to convince the reader to read your resume. That's it. If I read about your long-term disability in your cover letter I would think you don't understand how to discern which aspects of a product are perceived by most as positive. I would feel a bit annoyed that I already have to consider the legal implications of knowing this information and make every attempt to dismiss the knowledge to make an objective decision about your experience. In the "death of a thousand cuts" world of interviewing, you'd already have two cuts! I would be searching for more.
Leave it out of the cover. In the interview, be prepared to deliver a direct answer similar to the one you suggest above. Try to avoid using the word "but." It's a polarizing word. Prepare one additional response giving further clarification. You'll probably never have to utter this response, and you'll feel more confident if you have it ready.
The purpose of your resume is to get the interview. Your accomplishments on that resume will have to be enough to overcome the employment gap, or you may not get the interview. Your unique blend of experiences are exactly what many hiring managers want.
Good luck,
--Michael