What I don't understand is how did they know that the source code was from a government's classified project and therefore should be deleted? The way that i see it is that if they happen to get their hands on malware source code then why wouldn't they assume that it is illegal and process the heck out of it? So if I was a bad buy and wanted to protect from my source code from analysis then I should mark it "Top Secret" and "Classified" and post it my github account and no one will mess with it?

I would tend to agree that the sysadmins are not playing nice. Even if MS does release the "fix" to resolve this issue, how are the users going to retrieve it without Internet Access? I wouldn't want to have to deal with explaining/faxing instructions on how to retrieve a disk and manually installing an update, especially if that update depended upon other updates.