Both (Longhorn and Workplace) were the culmination of RDBMS hype, where companies left and right tried to solve every problem by using hammer as a tool of choice.
Back to Longhorn, it has been chronically late and finally the project got dumped and rebased upon NT stack. Thus Vista was indeed a rushed attempt of fixing the Longhorn fiasco and after that Win7 was a solution to the Vista fiasco.
Thus from the viewpoint of how bad it could (and indeed should) have been. Both Vista and Win7 were an exceptional success.
Also it made me really appreciate how nimble and agile Microsoft really is.
XP released in 2001; Vista released in 2007, essentially an updated XP with some Aero bells and PMP whistles. That it was only started in 2005 after throwing away the Longhorn fiasco stuff does not make Microsoft "nimble" or "agile" in my opinion.
MS is not agile in the same sense as your YC funded startup is. That would be comparing speedboats to super tankers and in the world of super tankers Microsoft is one of the super tankerest of them all.
Nokia, RIM, Boeing, HP, Yahoo and many others couldn't pull a single "pivot" out of the hat all the while Microsoft keeps on dancing.
They are far from my favorite companies, however Microsoft and IBM prove year by year that elephants can and do dance. And what a gracious waltz that is. For an elephant of course.
Vista was pretty extensively reworked under the hood. It featured UAC, new driver models, a completely reworked network stack, and a new, vastly-improved memory manager among other things.
Vista was, ultimately, far less ambitious than Microsoft had intended for Longhorn -- which is why they essentially scrapped the project and started over in 2004 -- but it was still a quantum leap over XP from a technical perspective.
W7 is essentially a UI-updated and polished Vista (which is why the NT version number only bumped from NT6.0 to NT6.1), but even given the relatively incomplete state of Vista at launch, it was a huge step forward for Windows, and certainly more that "an updated XP with some Aero bells and PMP whistles."