And really, you can defend MS all day long, and say that they have every legal right to do this, and I'll agree, they do. But that's not my point.
My point is the problems with digital media, which oprevent widespread adoption. This is just one small example of how easy it is for customers to get screwed out of their money/time. The fact that this behaviour is NOT illegal, is part of the problem, and part of the reason the whole damn thing is so unappealing to alot of people.
MS, or any othe provider, can do anything they want, and you have next to no recourse, you are but one small consumer with no direct support at all. It's not a system that will work!
If these companies want digital distribution to succeed any time soon, they have to ensure that these problems do not happen. At all costs, they need to err on the side of the consumer not getting scammed. These are not thieves or criminals we're talking about, these are people who purchased the content and paid their own hard-earned money. A system that allows these sorts of people to get ripped off, will never succeed, imo.
My view is that, in a system where the consumer is not getting a physical copy of the IP they are paying for, the companies selling the product are obligated to have higher level of responsibility with ensuring that the consumer is protected. Otherwise, it will always be a niche market, since B&M stores will offer superior customer service, reliability, and consumer satisfaction.