"We're very clear that drivers and software that work on Windows Vista are going to work really well on Windows 7"
Windows 7 will be incompatible with just about every third party application. Any compatibility with other Microsoft will be purely incidental.
"We are going to build on the success and the strength of the Windows Server 2008 kernel"
We're making it an even larger resource hog. Idling, Windows 7 will likely occupy 2 or more cores, and 4GB of ram.
"The key there is that the kernel in Windows Server 08 is an evolution of the kernel in Windows Vista, and then Windows 7 will be a further evolution of that kernel as well."
We're going to try our best to make Windows 7 so convoluted that no one can possibly discover the vast security holes.
Hope this is a bit easier to read.