You assume that the original code is still available, which might not be the case.

In that case it's exactly the same as if Microsoft never used the code... it would still have disappeared. That's what would have happened if it were GPL code. Proprietary software vendors can't use GPL code, because there's no way they can use it without making their entire product GPL... which most software vendors won't do.

In that specific case you are right.

But in the case of (for instance) the Linksys NSLU2 (or various WRT and WAG models), the whole community around them was possible because the code was available and people could mess around with it. In this case it was to Linksys advantage to use GPL firmware, to the users advantage that more could be done with the device, and to the community's advantage because changes and improvements could be fed back to the general linux ecosystem.

Linksys sells hardware, not software, it's not a valid comparison. People can copy their software all they want - they still have to buy the hardware to run it on.

No, because you could still get the code from Microsoft, assuming the original code would be gone for whatever reason.

Commercial vendors could always make use of LGPL if they distribute the software. Unless they are using languages like Go.

As for server side applications most vendors are just lechers. They use the code because they don't pay anything for it and most never return anything back, regardless of the license being used. This is my Fortune 500 experience.