If Microsoft doesn't have a secret internal build of Windows that runs on a Linux Kernel, they're out of their minds.
The Windows Kernel, as cool as it is, is 100% a cost center. If Microsoft switches (seemlessly) to a Linux kernel, no one would really notice. So at some point they should really switch it.
Legal question. If Windows on the linux kernal needs to open source, but that does not apply to other software it runs, right? So could they close source their DE and charge for that, or charge for the windows store?
That is correct. Microsoft could simply charge for their closed-source desktop environment or their package manager or their software environment in general, but any modifications to the kernel would need to be free and open-source (though they could still charge money for it).
even with linux being vastly superior, it nice we have 3 major kernels with widely different approaches. it would be sad if either of these 3 dies out
Agreed. I do think at least a couple versions of the Windows NT kernel are going to live on forever in emulation, thanks to some pretty awesome games that require it.