In taxonomy_form_alter where the taxonomy fields are added to the node edit form, there is piece of code with "// Add fieldset only if form has more than 1 element." as a comment. Assuming that is the behavior the code is trying to achieve, it isn't working correctly. With the current code the fieldset is only added if the form has more than 1 element, and at least one of those elements is not a free tagging vocabulary. This is because all free tagging vocabularies are grouped together in the $form['taxonomy']['tags'] array, and thus the check doesn't detect there being more than one of them. If this is actually so by design perhaps the comment should be changed, because as it is now it is quite confusing.
Comments
Comment #1
catchhttp://api.drupal.org/api/function/taxonomy_form_alter/6 does not have an entry for Drupal 7 any more.