I haven't heard anything about comps being based SOLELY on your local complex, but that would certainly be the most obvious place to start. The reason is simply that those in your development are most likely to be most similar to yours. The problem with using comps from other developments is that the quality, amenities and price range of even adjacent complexes can vary substantially - just like with neighboring single family home developments. This makes it tricky to ensure that you're actually comparing apples to apples, which is the whole idea of an appraisal.
As for foreclosures/HUDs/short sales, etc., the ideal situation is to NOT use these on a property which is not in that status, unless the market is totally dominated by that type of property. If it is, then they can be used sometimes - especially if there isn't any other choice.
So - yes, the idea is to use properties within your complex - if possible. The idea is also to use 'regular' sales - again, if possible.
Hope this helps...