Several times I've had buddies in my buddy list become unchecked when I've never unchecked them myself.

When this has happened, I asked the buddy if they could still see my location (3 different people on different occasions). They reported seeing my correct location every time, both when the box magically became unchecked and after I rechecked the box.

I'm not sure the what the circumstances are causing this bug, but it appears to be cosmetic only. I suppose someone mistakenly could think they have the box unchecked for a buddy and actually be transmitting their location info without realizing it.