I think he said the actual "Windows source code", not the git repo containing all of its changes
I don't think he copied the structure without the git files to make the count, nor deleted/moved elsewhere the .git directory for that. Neither that is just source code there, (versioned) bitmaps, third party drivers blobs and more probably it's there too.
https://devblogs.microsoft.com/devops/optimizing-git-beyond-...:
”GVFS allows our developers to simply not download most of those 3.5 million files during a clone, and instead simply page in the (comparatively) small portion of the source tree that a developer is working with.”
Having said that, the linked https://docs.microsoft.com/en-us/azure/devops/learn/git/gvfs... claims Windows gives a size about half that 500GB for the Windows source code:
”the Windows repo, which has over 3 million files in the working directory, totalling 270GB of source files. That’s 270GB in the working directory, at the tip of master. To clone this repo, you would have to download a packfile that is about 100GB in size, which would take hours. And once you’ve succeeded in cloning it, local git operations like checkout (3 hours), status (8 minutes), and commit (30 minutes) would still take way too long to run”.