I'm sure there aren't many engineers at Microsoft who wouldn't love to throw out the whole Windows paradigm and build something new and better from scratch.
Windows 95, 98 and Me are evolutions of the Windows 3.1 codebase, and then mercifully died. NT begat Windows 2000, XP, Vista, 7
You can see that they changed a lot of OS internals for the better (writing C++ code on win 3.1 it's trivial to lock up the whole OS, NT didn't have that issue), and then worked hard for compatibility.
While that's certainly true, the differences between NT 4.0 and 98 weren't particularly huge. NT was certainly the better OS, and it's good that they decided to adopt it, but it wasn't really a paradigm shift, and Windows applications were still cross-compatible.
My intention isn't to say that Microsoft hasn't made significant positive changes over the years, but rather that Windows would be a vastly superior operating system if the same people responsible for it currently were able to start from scratch. Say what you will about Microsoft, they still have some incredible engineering talent.
They kinda did. When Windows 3.1 was a hit, the server OS was Windows NT ( http://en.wikipedia.org/wiki/Windows_NT ) NT = New Technology.
Windows 95, 98 and Me are evolutions of the Windows 3.1 codebase, and then mercifully died. NT begat Windows 2000, XP, Vista, 7
You can see that they changed a lot of OS internals for the better (writing C++ code on win 3.1 it's trivial to lock up the whole OS, NT didn't have that issue), and then worked hard for compatibility.