On top of that, Azure seems to have become the main platform, and most people that cared about their career have jumped from Windows into "Azure OS".
So Windows is left with the GUI civil wars, Windows old timers that cannot let go of COM (think ATL) and classical Win32, or new employees raised on UNIX workflows without any background on Windows development history.
See efforts to put WebWidget2 and Blazor everywhere, while key figures from WinRT are no longer around, designers with macOS only experience get into the Windows UI design team, CLI tooling instead of VS GUI wizards,...
For deep level changes you're probably right, but showing ads in windows is probably a board level decision. At least Satya doesn't look like the CEO who would approve it with all his product focus, it must come from above.
Windows 11 arguably looks better than Monterey. Please don't tell me closing windows on top left is a good UX decision and also don't tell me that Mac's weird 2.5D icons look good. Apple's software design language is actually terrible. Of course that can't be said about the hardware - that's world class.
Windows 10/11 would look great with an interface close to Zukitre for GTK2/3 from BSD/Linux world. Boring, gray neutral, yes; but it has clear buttons and widgets. Put a dark mode based on that and the problem it's solved.
Lack of design in Windows is a direct consequence of MS's inability to steer its process and product strategies.
Multiple competing GUI teams, user experience, core devs unable to roll out features because of the number of stake holders, etc.