In case you're interested there's an interview posted with Amir Majidimehr from MS's Microsoft's Consumer Media Technology Group. Gives some background as to MS's stance and where they are going:
For a while, we were neutral. Both of the formats had been testing with our codec technology. But for us, there were two technologies in particular we cared about for a next-gen format: interactivity, and content security. In terms of interactivity, Blu-ray looked for a while as if they were going to adopt the same technology as HD DVD, which is called HDi. And on security, it looked like Blu-ray was also going to use the same encryption technology, which is AACS.
Unfortunately, in both of those areas Blu-ray deviated from those plans. Which meant that if we wanted to support Blu-ray, we had to implement two completely different authoring systems to support both. And that, combined with the manufacturing issues we saw with Blu-ray versus HD DVD, pushed us over the edge to side with HD DVD. This was about, a little over a year ago.