Having to re-install the OS because of virus issues, etc. is NOT usual and shouldn't be punished by forcing the user to go through some stupid activation system.
Having to re-activate because of hardware upgrades (new motherboard, etc) is also not unusual. Again, I don't see why a PAYING customer should be be punished by forcing the user to go through some stupid activation system, when pirates don't have to deal with the activation system.
Just because the activation system hasn't negatively affected you doesn't mean it hasn't negatively affected many, many paying customers. Why should I get treated like shit for being a paying customer, when I could get a better user experience by pirating Windows?
And your point about MS not knowing what it's doing...
If the activation system was useless, and had no effect on revenue, it would be gone the next day.
I've been a legitimate customer since Windows 3.1, and I've only had to activate by phone 1 time. It was painless.