The backward compatibility issue
"attempts to deal with all that cruft (most recently via the doomed Windows 10X) have tended to flounder on the requirement to make that one weird app work."
I do wonder just how many of these old and weird apps are written in a way which requires direct access to the underlying hardware (*), and how many of them would merely fail to run on a "clean/current-API-only" version of Windows due to things like changes in the API calls, differences in where user files are stored etc, and from there how many of these "worthy of continued support despite the headaches it causes" apps could then be catered for simply by providing a set of VMs for different versions of Windows - i.e. re-introduce the XP Mode functionality MS offered back in the early days of Windows 7, but extend it to cover enough different versions of Windows (even back to 3.1 etc if needed) that pretty much every legacy app anyone might still want to run on a modern PC could be accommodated without the need to continue compromising the core OS with legacy support cruft.
Wouldn't necessarily even need MS to build this functionality into Windows themselves, all they need to do is provide a set of licence-free/pre-activated OS images for use with VirtualBox etc. so that anyone who needs this level of backward compatibility can set it up for themselves without the need to either still have their own copies of the installation media (assuming they still have access to the necessary reader hardware, and that it's all still in working condition), or to obtain a copy via means which may be not entirely legitimate.
(*) and which haven't already been rendered useless/unable to be run on a newer PC due to changes in the hardware itself - e.g. anything using a dedicated ISA/VLB/MCA (any other legacy formats I've forgotten?) card which can't be connected to anything built in the last couple of decades...