I guess the way the Government see the situation is. If they're paying Microsoft to provide them with a service/software with guarantees drafted up into a contract when SHTF the Government can turn it all back on Microsoft and say, "But the contracted stated you would be providing a secure platform..." You'd be surprised how popular Windows CE actually is. I've seen it used a lot on touchscreen kiosks here in Australia.

Well, I certainly hope of all our governmental organizations the NSA is going to be the least inclined to satisfy themselves with "passing the blame to the supplier when security is inevitably compromised"

Yes, its used in single board applications like the mini2440. Though android 2.3 is quickly gaining popularity due to how simple it is to adapt and run.