And apparently does so illegally. Rafael has written up a great post, with a side-by-side code comparison, about how Microsoft's Windows 7 USB/DVD Download Tool uses code that was obviously taken directly from open source code that is licensed under the GPL.

While poking through the UDF-related internals of the Windows 7 USB/DVD Download Tool, I had a weird feeling there was just wayyyyyyyyy too much code in there for such a simple tool. A simple search of some method names and properties, gleaned from Reflector’s output, revealed the source code was obviously lifted from the CodePlex-hosted (yikes) GPLv2-licensed ImageMaster project. (The author of the code was not contacted by Microsoft.)

I see two problems here. (I’m not a FSF professional, so there may be more.)

First, Microsoft did not offer or provide source code for their modifications to ImageMaster nor their tool. According to GPLv2.

Second, Microsoft glued in some of their own licensing terms, further restricting your rights to the software (TermsOfUse.rtf). According to their terms .... "You may not ... publish the software for others to copy."

I understand Microsoft is a big company and that this could have been externally contracted work, but someone dropped the ball during code review/licensing.

Yes, yes they did.