That isn't really Window's fault. That is the fault of the DRM working as it was designed to work.
IMHO what we really need is not another licensed protected solution like WMC that might be another dead end. We need someone to crack cablecard DRM and find a way around it (and preferably implement that in an open source manner so any software could record those programs and strip out the DRM as you go).
The problem is the motivation to do that is low because quite frankly there are other sources for broadcast TV content. Blu Ray DRM keeps getting defeated because that is the only place to get pristine 1080p copies of content, which means there is money to be made cracking them. The same motivation doesn't exist for TV recorded content.
DRM always works the opposite as it's intended and makes legitimate customers (aka those paying for TV service who just want to record it) have a worse experience than the pirates (aka those who just download the already recorded episodes off the internet automatically). It looks like content companies plan to double down on DRM for 4K content so this isn't the last time we will watch this play out.
The thing is, the DRM isn't from the cable companies, it is from the consumer-end software or device that is making a recording. On the cable, the only real difference between some channels is a metadata tag that says Copy-Once vs Copy-Freely. (or, for some PPV content, Copy-Never... which, as a side note, I don't really get, because you can time-shift, but I guess the buffer is different in the software compared to a complete recorded file).
All of that is encrypted/encoded just the same from the cable provider, but that is as a "live-steam" on the cable line, encoded with something likely more complex than QAM. The DRM comes into play at the consumer level, where hardware/software compliance requires a qualified DRM scheme is applied to content which has the Copy-Once. In short, the developer has to provide proof to CableLabs that their package can meet the requirements set forth by the industry, and then I think they get some keys or something that help allow it to happen. But in short, a computer is just capturing the raw MPEG2 stream with metadata, as the CableCARD device, such as the HDHR Prime, decodes the stream encryption. With certification from CableLabs, Microsoft implemented their PlayReady DRM scheme.
I think SiliconDust is also using PlayReady, which of course adds a fair bit of licensing cost to the mix thanks to Microsoft.
But as to your first point, the DRM itself does not technically limit content to playback on only the original device on which it was recorded. Rather, the keys to the DRM can be pushed to allow playback elsewhere. Microsoft chose to limit it either out of spite or to strongly push the Extender system, either way that sucked. I had WMC on both my HTPC and also my desktop so I could watch TV on one of my monitors while at my computer, but I could not watch any recorded copy-once media. If WMC was going to live on, I was contemplating buying a cheap Xbox 360 to serve as an extender, which could browse and play any recorded content on the network.
SD is planning to provide the HDHR DVR suite with the ability to watch all recorded content, DRM or not, on any device you setup. Whether they succeed or not is another story, but that is not a limitation of the DRM scheme. Remember, PlayReady was/is involved with Microsoft's music services. I know it was for sure in Zune, and you could download and even transfer music onto a handful of devices, and if you made it an allowed device and let Zune grab the keys, you could listen to DRM content on up to 5 devices. That was simply an arbitrary limit imposed by Microsoft, but the point is that DRM playback can be extended to possibly an unlimited number of devices, provided you have a means to provide keys that explicitly allow that device.
All that aside, I wholeheartedly agree, DRM is loathsome and should die. It does nothing to limit piracy, only encourages it. But the cable industry is essentially a lost cause. They'll never cater to consumer rights. Only with government mandates from the FCC or the like will Cable ever cater to us. If they had their way it would be a total lock-in. Consumer-rental CableCARD is something that was begrudgingly provided in the first place in order to meet FCC mandates, not something they saw as an opportunity. But their lobbying power is excessive and disgusting, so everything happens at a snails pace.