The fundamental difference between the two movements is in their values, their ways of looking at the world. For the Open Source movement, the issue of whether software should be open source is a practical question, not an ethical one. As one person put it, “Open source is a development methodology; free software is a social movement.” For the Open Source movement, non-free software is a suboptimal solution. For the Free Software movement, non-free software is a social problem and free software is the solution.
The two are linked by their openness, but to Stallman, Open Source and Free are not synonymous. His final anecdote about the software executive that "supports Linux" with non-free software compatible with the platform really nails home his point - the Open Source movement does not grant the users freedom, but only helps and speeds up the development of the project. Free software is more idealistic, while open source software is more pragmatic. Either way, both are more free than these two guys.