It's not saying Open Source is banned. The idea of open source does not make something free to distribute or make derivative works. The clauses copied in other comments are simply license requirements which cannot be used in licenses intended to be used in software distributed on Microsoft's network. Think of it this way, you can open your source; you can't require source distribution in your license, you can't allow derivative works to be created of your software, and you can't allow redistribution at no cost. These are clearly protecting Microsoft's interests as a marketplace. If someone were to purchase your software off their marketplace, and the licenses allowed free redistribution, nothing would prevent that individual from then giving away the 'app' to all his or her friends for free. If it was licensed for derivative works the individual could make a minor change and freely distribute the derivative work. The source code clause has me a bit confounded, but I believe it may be to mitigate risks and liability for Microsoft.
This legalese would not limit an app author from releasing the source, on their own website for example. Lastly, remember open source does not implicitly mean free. See Unix.