Yes, Obama still wins just like Bush did in 2000.

The scenario is definitely possible, but unlikely because Obama needs turnout to win the election. If for some reason he gets low turnout and loses the popular vote, more than likely he loses the election too. There's nothing to suggest he won't get the turnout, but stranger things have happened.

Edit: One other thing. Obama is probably going to lose several hundred thousand votes in NY and NJ due to people not voting because of the storm. While it won't affect the outcome in these states, it will slightly affect the popular vote.