They are also great for end users. No sitting there for half an hour while your new game you spent a huge amount of money on slowly spews it's data onto your hard drive. 1% .... 2% ..... 3% .........snore
This is although a bit unclear. On my linux system, the installation of several GB software of mine took just around two minutes or so - this actually states that Microsoft does it's file system wrong (even though it got better in more recent versions, it is still uncomparable to Ext4 or Btrfs). And honestly why you couldn't run game directly from DVD - it is just up to developers.
The HDD is preferred as storage, because it is faster to load (and loading several GB datas into ram from HDD is way faster, than doing it from DVD). As for this problem - try running RAGE on PS3, the streaming of megatexture is slow and if you move, only low-res texture pages are actually in memory (and the whole game looks bad), this doesn't happen on PC.
Consoles also get plugged into the family TV. Nice big display instead of a 17" monitor. I know you could connect your pc to a big screen, and wire it into your hifi, but how many people do?
We would have to do statistics probably. Even though I use 23" display for work, one of the desktops ('kay now I definitely look like average user ... with sarcasm ofc) here is connected to *TV display* - for gaming & movies. The setup on Windows took me like 1 minute, and just about 30 secs on Linux (the desktop environment was faster ) - and it was just about setting whether I want desktop copy on that display or separate desktop.
PC's are a nightmare to develop for. The sheer number of combinations of ram, graphics card, and hard drives makes it painful. Then mix in windows xp, 7, 8 direct x 8 9 10 11.
This was, is and will be a problem ... although it can be reduced. Anyway I don't know why are you mentioning different Windows versions, as I have my window code running since Windows 98 or so and it still works without any issues (same goes for X11) - which means that I either still use basic system services, or that an Armageddon is paying me a visit soon.
And as I don't want to start flamewar (please don't reply with flame on this) ... double warning!!! ... DirectX can be exchanged for something more portable like OpenGL, OpenAL, ... - bringing new (reduced) set of nightmares along! ... end of warning!