I'm sure this has been postulated at length already, but it's an interesting question.

Let's say that, for want of a better explanation, M$ send out a beta release of their newest Windows subspecies to a select few testers. For some reason there is a mix-up (again, based on their track record : we've heard about the various things that snuck onto NT service packs) and some Johnny No Stars accidentally puts the wrong CD in the wrong envelope and voila! (Or a disgruntled employee, or whatever. Basically, a complete, untraceable copy of the code.) The source hits the net, and sticks (tools like Gnutella and KaZaa/Morpheus/whatever making it impossible for M$ to totally stomp it). So what would happen next? WINE could be finished rapidly, for one thing. M$ could then slap a lawsuit on WINE (and whoever else makes use of the code), but could they claim a "clean room" reverse engineering took place? (The DMCA compounds the legal minefield.)

M$ surely have a plan in the event of this happening. Would M$ rush out a new version of Windows that breaks compatibility with all before it? (Like that could happen ... uh wait.) Would other software companies (I'm looking at you Sun, Lotus and Apple) get in on the act? And what kind of timescale would we be looking at for the whole drama to play out?

For added marks, a slight twist on the scenario : what if the DoJ (or equivalent) was to order M$ to release the source? This is the ultimate goal of a case being brought against M$ by Sun in Europe, as I understand it.

Q: Will this result in a proliferation of incompatible versions of Windows?

A: As opposed to the current situation you mean?