My view is that this scheme will fail, or at least will fail to be implemented anywhere near as fully as described.
Intel have tried to bring out non-80x86 processors and failed. 80x86 compatibility is essential for all the open source software out there.
Major corporates, and some small countries, are insisting on the ability to run open source. They will boycott it.
This scheme is basically just a means of selling a non-IBM-PC compatible machine, which will run only M$ code, and IMHO it will go as far as previous attempts to do the same have got. The only firm that has sort-of managed it is Apple
And they did it through having a fantastically (fanatically, some might say) loyal band of followers, at a time when the IBM PC was anyway not a good option for graphics-intensive work.
I don't think HD security will be broken - it is far too strong. It isn't the CSS stuff used on DVDs. What will be broken, for sure, will be the data. You need to access the data in raw digital (or high quality HD analog) format anywhere at all, and the genie is out of the bottle for that particular movie. Even converting 24-bit RGB data from analog back to digital will be so good nobody will tell the difference, and the analog data cannot ever be protected even if it exists only inside the display product. It then won't take long for every imaginable movie to be all over P2P.
As has been stated above, a good reason to keep one's XP install disks, or (even better in some cases as they don't need registration at all) win2000 install disks