This is such a bummer I don't even know what to think anymore, and I do think if the Sox have been in on Montgomery, that this would drive their price up.
That said, I don't think it stops them from being in on Montgomery, or from looking for a good trade for a younger starting pitcher. They've got a lot of young, cost-controlled players -- Duran, Rafaela, Abreu, and Mayer and co (esp if Mayer bounces back and Teel/Anthony have good starts to their seasons) could all be very enticing to other teams. I still think it's as likely that the team tries to improve the roster through such a trade than it is that they shell out 150 million for a pitcher in his 30's, but we'll see. Still possible they do both.
I know a lot of people are mad at the organization for not spending money, or for spending money on a guy who's only gone on to get hurt, but if anything Giolito is a reminder to all that every pitcher is a very quietly ticking time bomb. People forget that Sale pitched around 200 innings a year pretty consistently for the first half of his career before the wheels fell off. That's why you don't want to pay out the wazoo for Montgomery or someone like him.
I'm still more bullish on this pitching staff than most. I think there's a very real possibility that with an improved defense, Crawford, Whitlock, Houck and Bello all shine, but we'll see.