'You've got to ask, given that Bungie and Microsoft are exclusive to each other (sweet) on the franchise, why Frank would need to leave.

It's all very confusing...'

No its not confusing the answer is clear as day, before Microsoft were always on Bungie's case in regards to Halo they would have some guy go to their offices and constantly nag them etc we all know the deal with Halo 2 or should do...Now Halo 3 didnt turn out the way it should have done.
Remember the Halo 3 trailer with commentary developer video? The bit where they zoomed in on Masterchiefs armour and one of the guys says and I quote 'This is our benchmark, thats what we're aiming for'

Did they f**k.

So no why not have Bungie's own guy Frankie to work with Microsoft who will in turn instead oversee Bungies next Halo work? Who best to know how Halo is turning out than one of their own?