There is so much theory out there about how to write stories. Through school, I've read the classics. Later, I read many fun books. I saw movies and plays. Listened to music. Many follow similar paths, like the
I'd like to see the aftermath of a computer programmer programming those elements into a simulation. With the right simulation, and the right parameters, I bet you could produce some top notch stories. With a simulation a human would need to take the reigns after the story has been outlined. I'm not sure we'll ever be able to create a computer program that can actively pull the human heart strings as well as a poet or painter.
To do this, you'd need a team with a bunch of computer programmers, a couple of story theorists, some good writers (to give you example sentences that can be combined, and one hell of a project leader. There are already some people out there working on this idea, and some of the fruits of their labor have already been posted on the internet. The Seventh Sanctum has a generator that spits out story ideas that are fusions of previous stories. And this one has a ton of different generators, to help you create your own story.
The biggest issue would be the almost infinite number of story element combinations. The further you get from theory toward application (in this case, making a story), the more permutations arise.