It got actually somewhat usable with the 2k/XP version, slightly better in Vista (notably: the utilities installer had option to use bash a default shell) and IIRC with 7 MS even again mentioned existence of the thing in marketing (with some cool new name for the thing).
I am aware it got much better later on, but given the way it was introduced, the mess with third party integrations, as Microsoft always outsourced the development effort (MKS, Interix,..), it never got people to care about afterwards.
First impressions matter most.
As there is another alternative one where Microsoft doesn't sell Xenix and keeps pushing for it, as Bill Gates was actually a big fan of.
If Microsoft had wanted, Windows could have officially been Unix too-they could have licensed the test suite, run it under their POSIX/SFU/SUA subsystem, fixed the failures, paid the fee-and then Windows would be a Unix. They never did-not (as far as I’m aware) for any technical reason, simply because as a matter of business strategy, they decided not to invest in this.
Whatever computer people would be getting at the local shopping mall computer store already had UNIX support.
Lets also not forget that UNIX and C won over the competing on timesharing OSes, exactly because AT&T wasn't allowed to sell it in first place, there was no Linux on those days, and had AT&T not sued BSD, hardly anyone would have paid attention to Linux, yet another what-if.
IIS and SQL Server (Win) boxes are fairly typical, still.
[1]: In fact, Active Directory was specifically targeted by EU antitrust lawsuit against Microsoft.