Surely there are downsides to telemetry and tracking, but they can be useful for development.
XP broke the subsystem isolation of NT in favor of enabling Windows non-NT types of drivers with higher levels of kernel/GPU efficiency due to less isolation. This also brought in the ability of the drivers to crash the kernel.
And that, my friends, was the end of rock solid Windows NT stability.
I was on the Windows team during the XP SP2 years. Stability was somewhat reachieved by an intense focus on defensive coding to detect rogue driver and the establishment of the WHQL, or Windows Hardware Quality Lab. WHQL was basically an investment in driver analysis tools and a moderately sized team inside MSFT who's sole job was to debug and fix other people's drivers.
It's not a good replacement for isolation though, and it requires sustained continuous effort by both MSFT and the windows hardware partners, which imho hasn't continued.
Cyrix MX166 PR200 with 32 MB of RAM was playing MP3 just fine while compiling the (linux) kernel and being snappy in the same time.
The SW has just become more bloated. SW engineers those days are not constrained by resources and this leads to a lot of bad practice.
Though playing mp3 was a heavy task consuming most of the CPU. It was hard to do anything while listening to music.
Or think about how pressing Ctrl-S once a minute became a reflex, because MS Office crashed so often.
Hell, anyone remembers how unstable Windows ME was? Or how desktop Linuxes were practically non-existent?
Current state of software is _amazing_ compared to what was available at that time.