The problem is that they bought into the iPad hype.
The correct way to build a tablet OS is to start with a desktop environment and optimize it - including third-party software - for fingers. We see this with iPadOS, which keeps getting hand-me-down features from macOS, implemented almost exactly the same as they are on macOS but with bigger tap targets.
In contrast, Windows 8 saw Microsoft taking the contemporary state of the iPad - single window, everything full screen, etc - and treating this as the future. Hell, I'm surprised they even shipped split-screen on it. They even locked down the app runtime to signed Store apps only[0]. My guess is that management saw dollar signs from how much Apple made from the iOS App Store and thought turning Windows into an "iPad Killer"[1] would replicate the same success.
Ironically, Windows 7 was already built to be a touch-friendly desktop, they just didn't actually finish making it touch-friendly.
[0] Which created a fun bifurcation between widget toolkits in the Microsoft ecosystem that persists to this day.
[1] Any time a company describes a product as a "killer" product, i.e. something intended to outcompete another product, they've already lost.