"You have to wonder how a company like MS, that really did produce some of the best (and certainly popular) software around has turned into the total insane asylum it appears to be nowadays"
Easy : mountains and mountains of money that insulate MS from the cost of failure.
Any normal company that pours $200 million into something does so with the firm intent of recovering the cost and making money from the investment because its survival is at stake. Microsoft, on the other hand, has money coming in whatever happens, so the fact that it can afford to lose $200 million basically means it has no clear incentive to monetize said $200 million to survive.
Oh, of course, high-level managers are around implying that the investment had better bear fruit, but then they run off to pay attention to the next billion-dollar investment and everything is lost in the maelstrom of day-to-day business. Then, at some point later on, somebody stumbles on the file and takes a look, brings it to some high-level manglement's attention and gets told "eh, that thing ? Didn't you follow last week's management session ? It's out-of-date, no longer part of our new outlook. Get rid of it."
Because Microsoft can still afford to change outlook every week. Companies that fight for survival cannot - they have to stick to their guns because they can't afford new ones. Not until the investment has paid for itself, that is.