I am trying to model a notification system where an event occurs during a time period (start date and end date). If the time period has been exceeded, the user is required to either update the time period or set a flag that the event has been i) cancelled, ii) completed, or iii) closed. If today is one day past the event’s scheduled completion date, the manager is emailed. If two days, the manager and their supervisor is emailed. If > two days, the manager, their supervisor, and the company owner is emailed. Every day after that it emails the three of them that the event is delinquent. Events can be scheduled any time in the future so the process needs to simply track when the event is Pending, Active, Delinquent (past the end date), Cancelled, Closed, or Complete.
I have started building workflow as a WorkFlow Service application hosted in Windows Server AppFabric because it appears that that is the best way to persist this long-running workflow. I have also started using the WF State Machine Activity Pack CTP 1 as it seemed the best way to model these different event states.
I am uncertain how to model this process as well as get the process to persist and continue running in the background to monitor the event’s state and behave as outlined above. I think I have all the states modeled correctly in the state machine. I am still trying to figure out the transitions from one state to another Any guidance is appreciated.

State Machines run in a burst of execution. There is really nothing to “run” while the workflow is persisted. I suspect what you mean is how will the workflow “wake up” when the timeout is exceeded.
The answer is that the Delay activity will create a durable timer. The AppFabric Workflow Management service periodically asks the persistence layer if there are runnable workflow instances – that is instances which have crashed or where a durable timer has expired.
Eventually the timer will be expired and the Workflow will be loaded and the Delay activity bookmark will be resumed.