So if a user is going to do a fresh install, they need to back up their existing data, perform a fresh install, restore their data, find all the old install disks from their existing software, install those. Look for the license keys for this software, fail since they bought the software ages ago, or pirated it from a buddy. Then throw their hands up in the air and get mad at MS.

It's a fact of Windows in the consumer market that upgrades just don't happen. Consumers almost always run their computers into the ground, then get the latest version of Windows when they purchase a new PC. This is something you stated in your post, yet you seem to think that MS will magically change this behaviour with this price point. I see no evidence to support that.

Additionally, the MS Store is almost a direct response to Apple's App Store on OSX.