Well, it's 306 for the Tories, and they don't have 20 seats to form a coalition, without pulling in the LibDems.
Well... unless by some miracle SinnFein formed a coalition with the Tories... Which is about as likely as Obama firing Biden and naming Duncan Hunter his vice president.
The LibDems are actually closer to the conservatives on economic issues than they are with Labour (for one thing, Labour is explicitly socialist, while the LibDems are about evenly split between social democrats, and free market liberals) but they have four basic policy planks that are fundamentally opposed to the conservatives principles: Eurocentrism, proportional representation, fixed term parliaments (like in the U.S.), and the elimination of the house of lords. There is no way the LibDems could form a long term coalition, without those issues being on the agenda; and there is no way the conservatives can do that.
On the other side of things, LibDem and Labour together still couldn't form a 326 seat government; never mind the illegitimacy question. They would need to get an additional 11 seats in their coalition, which dramatically weakens their offer, and their potential government.
There are only four seats Labour can really count on as aligning with them: Sinn Fein is anti-tory but is HIGHLY unlikely to join a labour coalition (and most of their seats wouldn't be voting anyway, weakening any notional coalition further); The SNP and PC are opportunistic here, but Labour simply can't give them a good enough deal to keep them loyal; the DUP would rather cut their own throats than conference with Labour... They'd basically get the SDLP and Green seats, and everything else is up for grabs...
Camerons offered Clegg the deal... If Clegg is smart, he's going to hold a little bidding war (a PRIVATE bidding war to avoid the bad PR, but a bidding war nonetheless). In the end, he'll still probably go with the conservatives (as I noted in a previous post, trying to form a government with Labour right now would be suicidal) but he'll be able to wring some serious bribes... uhhh concessions... from Cameron.
I do not think this bodes well for Great Britain friends...