Electrician Question on grounding outlets

[PSS]

I argued with an inspector till I finally gave up that a gfci will work with out a ground wire. Here's Mike Holt's take on it backed up with a code reference.

Under what condition can a two-wire receptacle be replaced with a three-wire receptacle, when no ground is available in the box?

A. Where no equipment bonding means exists in the outlet box, nongrounding-type receptacles can be replaced with [406.3(D)(3)]:

Another nongrounding-type receptacle.
A GFCI grounding-type receptacle marked "No Equipment Ground."
A grounding-type receptacle, if GFCI protected and marked "GFCI Protected" and "No Equipment Ground."
Note: GFCI protection functions properly on a 2-wire circuit without an equipment grounding (bonding) conductor, because the equipment grounding (bonding) conductor serves no role in the operation of the GFCI-protection device.

CAUTION: The permission to replace nongrounding-type receptacles with GFCI-protected grounding-type receptacles doesn't apply to new receptacle outlets that extend from an existing ungrounded outlet box. Once you add a receptacle outlet (branch-circuit extension), the receptacle must be of the grounding (bonding) type and it must have its grounding terminal grounded (bonded) to an effective ground-fault current path in accordance with 250.130(C).

http://www.mikeholt.com/mojonewsarch...s~20050510.php