According to Dan Connolly of The Baltimore Sun (as well as the rest of the usual suspects), the Orioles have acquired Michael Morse from the Seattle Mariners. Word on the Twitter, first from Peter Gammons and then confirmed by Roch Kubatko, is that OF Xavier Avery has been sent to Seattle to complete the deal.
The Orioles have been claiming players like crazy on the waiver wire including, reportedly, Josh Willingham and Kendrys Morales. No deal could be reached on either of those hitters (Roch Kubatko reports that the Twins wanted pitching prospect Eduardo Rodriguez for Willingham) but they did get Morse.
It was rumored that the Orioles were interested in trading for Morse during the off season, but ultimately he was traded from the Nationals to the Mariners, where he's been having a pretty rough season, hitting .226/.283/.410. He's played in just 76 games due to a quad injury.
You may ask why the Orioles want a batter with a hitting line like that, and the reason is that Morse has a platoon split that favors hitting lefties. This season he is hitting .245/.312/.459 and in his career he's hitting .293/.349/.495 against them. Presumably Morse will platoon with Wilson Betemit at DH for the rest of the season.
It seems to me that Danny Valencia has been filling this job relatively well, but in my opinion Xavier Avery isn't a very good trade piece so it makes little difference in the long run. Morse has played some left field, so it's possible putting Valencia at DH and Morse in LF against lefties is an option. If they did that it seems that they'd lose some defense in replacing McLouth (this opinion based mostly on the pictures I've seen of Morse bumbling around in the outfield).
Morse is the second year of a two-year contract and is earning $6.75M this year. He will be a free agent at the end of the season.