I don't think it's anymore accurate to say windows can't compete in tablet form because it couldn't in the past, then saying Apple can't complete in the PDA market because the newton was a failure. Or ever take a dominate place in the desktop market because it's failure for the last 20 years. Look at the fall of Palm computing.
Companys learn from thier mistakes and make improvements. Technology improves, things change. The XBOX 360 is a perfect example of this.
They are now a BIG player in the game console market. And it wasn't because they muscled SONY or Nintendo out with special deals. It was because they put out a good product at a price people were comfortable with.
Your points are reasonable, but it doesn't make Windows (even in its recent form) any more suitable as a tablet OS. It hasn't changed *that* much.
I say this as a former Tablet XP owner. Shudder.