So in other words, you're saying preinstalled Windows is free only if your time is worth nothing. Where have I heard that one before?
No, he's saying that the total cost of Windows is greater than the purchase cost of Windows. He's also saying that the total cost of Windows is greater than the total cost of some alternative, one which doesn't have the same problems.
Viruses exist for all operating systems.
True.
ake GNU/Linux on x86 for example: a virus running as a limited user can infect all programs installed into a user's home directory.
Also true, with the caveat that on GNU/Linux, a downloaded virus doesn't automatically have the ability to be run.
If Linux had majority desktop market share, it would have the same virus problem as Windows.
This is a non-sequitur, none of your prior assertions implies this.
Windows has RTM through Service Pack 3; Ubuntu has Hardy Heron through Karmic Koala.
Number of upgrades is meaningless, cost of upgrades, in both time and money, is meaningful.
What operating system doesn't need to reboot for a kernel update?
I'm not sure about other *nixes, but rebooting for a kernel update isn't strictly necessary in Linux if you use KSplice.