Even better, the following seems to explain how the instructor I checked out with at a local school logged my time as PIC in the two hour checkout (sole manipulator of controls).
Logging PIC time ... (Private and Commercial Pilots)
1. When the pilot is the sole manipulator of the controls of an aircraft for which the pilot is rated.
Logging PIC time (Instructors and Others)
A flight instructor may log PIC "while acting as a authorized instructor". No change to previous regulations.
A student pilot can now log PIC. That’s new, and since there is no restriction, your logbook can be updated so that all student solo time prior to August 4, 1997 may be logged as PIC. When an instructor is aboard, since the student is not rated in the aircraft, flight instruction is still logged as dual not PIC.
Then there are some unusual situations which occur. A private pilot flying with his friend (a CFI or ATP) aboard as a passenger. What is the status of the CFI or ATP who is obviously a more senior pilot with more experience than the private pilot? The regulations don’t address this situation, but the courts may find that the more senior pilot has some or all the responsibility for the operation or safety of the flight.
In summary, the person who is pilot-in-command may log PIC, others may also log PIC depending in the circumstances.