Well, you have to put it in context, home users at the time could have:
1) free (in the sense of included in the price or their new PC) a somewhat unstable OS with lower requisites (particularly about RAM) where most software somehow ran (including games)
or:
2) a more stable, paid (costing if I recall correctly more than the equivalent of 2-300 US$ of today) OS needing double the RAM (think of 128 vs. 64 MB), definitely slower, where they could not run many games
for some reasons many chose #1, and BSOD's (on the 9x/Me) were so common that it was perceived by many (that had not any occasion to experience the stability of NT and of 2000) as a "normal state of things".
I disagree somewhat. The 9x family didn't handle multitasking well and had driver issues, frequently leading to lock-ups and BSODs. The architecture didn't handle isolation well, but NT did. Windows NT mostly stayed out of people's way in XP unless they looked for those menus. It was a huge problem for Vista, though.