There are many options to solve this issue (ex: the native VHD boot, VirtualPC, HyperV).
Telling Microsoft to remove activation is a knee-jerk reaction that helps no one.
You can even run Linux as the Host OS.
I write and sell software, and activation is absolutely critical and responsible for at least half my revenue.
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.
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?
The really long activation keys I've run into are not from MS and are ones you can cut/paste (ie, not the ones used to install the OS fresh).
Go down about half way. It's actually 54 digits, not 100. But the IVR isn't 100 percent accurate, and I have found I usually have to enter at least a few of the sets multiple times. And the voice system is one of those unskippable ones, so you can't just start entering numbers again right away after it detects a mis-enter. You have to listen to a 30 second message about re-entering the key first.
I'm done with this company now. I bought a Mac, and I'm not coming back.
(I'm a MS employee but I was doing this at home with my "I'm a customer" hat on)
In any case, it's not a problem for me anymore, as I now only run a pirated copy of Windows 7 in a virtual machine on my Macbook for testing on.