TaxGuyBill, you're correct, they owned it for several years, then rented it for a couple years right up until the sale in 2016. One of the exceptions to nonqualified use of the home after 2008 in Pub 523 and the code quoted by TaxGuy reads as follows:

"Any portion of the 5-year period ending on the date of sale or exchange after the last date you use the property as a main home (meaning you owned and lived in the house for at least 2 years from the 5-year period ending on the date of the sale)."

This describes their situation to a T, therefore, I conclude that the rental use does not count as "nonqualified use". However, I am still open to anyone's challenge or opposing interpretation of this.

Thanks for the feedback TaxGuy, Rapid Robert and Roland- your insights and tax knowledge are always greatly appreciated.