OTOH, MS Research was always very cool (and they started contributing to e.g. OpenBSD many years ago), OS kernel has always been much better than a glance over win32 API shows you, and Office365 is definitely world-class.
I suspect that the engineering culture in MS has always been rather good (with engineers like you and me, and many of them a good deal better); the radical transformation is probably mostly within the top management.
My no-stalgia: It was an overengineered beast at the time, with an original grand vision that wasn't performing well enough, and seemed to be fixed with duct tape.
The Video Driver + GDI, originally conceived to be outside the kernel, was too slow - so it was moved back in, causing a lot of problems.
The IO subsystem was nicely abstracted with IRPs. Except it was too slow, so they added the "FastPath" interface, which fixed the speed but made it impossible to safely unload or stack drivers. IIRC, they were the main reason for the "PlugFest" parties, where microsoft would invite vendors to come to place and then install their drivers in random orders and to debug the collisions -- the fact that microsoft needed to organize these parties is an indication of how bad it was.
The POSIX subsystem was removed in XP/Server 2002. Perhaps you mean SFU? That was discontinued in 2004. Oh, you mean SUA (nee Interix). Well, that was removed in 8.1.
And your experience might be different, but "incredibly performant" is quite the opposite of my experience with the POSIX subsystem.
And they've been trying to remove it since that political requirement was off the table. Except it turns out that it was actually in used by some customers, so they keep bringing subsets back.
Actually, I think there should be a law for making OS kernels replaceable and separate from UI shells. I have to use Windows as certain software and drivers are not available/performant enough under Linux, so I have to deal with the crazy Windows 8.1 UX.
Also it's trivial to replace the UI. Minus the 5 billion dollars in R&D of course. But it's just one registry key if you want to get started on it...