I suffer this fate every day. It is made worse by being locked down so hard I can't even use PowerShell. All I have is Notepad++ for development, searching, mass text manipulation...
It's one thing having to use Windows for development. I've done it, you can work around lots of issues with Cygwin and other separate tools that enhances the development unfriendliness of Windows. If you are developping in Java, it's even less of an issue as Java itself and most of its IDEs are cross-platform.
But being so locked down that the only thing to do development with is Notepad++ (you can't even run vim or emacs?), that's actually so far beyond that even a complete non-tech person should be able to see that this is harmful to your productivity.
What you do need is a reasonable set of tools to be installed and a quick (under an hour) way to get items installed or updated.
What about a VM ?
Approach it from the tools use, do people use pads and pens or do they use Word?
Depending on the company's hardware VM performance could be a real issue. You'd be surprised how many developer jobs are done on old Windows XP boxes. Big companies typically do upgrades in multiyear cycles.
It's really easy to do if you need it.
I would quit or require a very high payment.