Now you are making the headache worse... partially through continuing not to think, but also trying to cover your rear while making it even more obvious.
We've seen a demonstrated effort in the Windows world to better modularize it for many years.
Back in the XP days, when a new SKU was required it practically took an act of god to make everything work... for Vista (and since) a great deal of work was done to make that process better, now things have gotten so easier to the point that now you can practically define and spit out a new SKU in a matter of hours... granted there is still a sizable bit of testing required to verify that things work the way you expect.
You see the signs of this all around... all of the versions of Client being on a single DVD, all of the versions of Server being on another. Core Installations of Windows Server, not to mention MinWin.
All built around the idea of being able to build a custom tailored build of Windows for different applications.
With the ARM announcement at CES... the importance of what has happened previously should be quite obvious.
Sure... you could go and install what you call the "desktop OS" on a game console, server, set top box, or phone... obviously that wouldn't make much sense as all tend to require different user interfaces... as evidenced by the fact that they do today. But why would you think for a moment that anyone would seriously want to have the same taskbar you have on your laptop on your phone or game console? More likely you simply misunderstood the scope of what fabian was thinking/suggesting.
Is it so hard to conceive of a future where a future version of the Xbox runs the same underlying kernel and libraries as a full x64 Windows laptop, or an ARM based tablet? Perhaps each running a different shell of some kind or with enough customizations that only UI based code need be changed when moving from platform to platform?
Note that the reason I said "trying to cover your rear" above... is your excuse that the desktop OS requires a keyboard and mouse for effective use... which would seem to imply CE does not.
Guess what, no matter what input system or OS you use, there will be work!
Given most of us don't have touch panel TV's, be it CE, Windows 7 Ultimate, or Linux that were to be installed on a 360, you'd still need to write a driver or two to make a Kinect or 360 controller provide any kind of input to the UI... let alone do something meaningful with it.