Was this counterfeiting? Most certainly not in spirit, nobody was trying to say "here's a free/discounted copy of Windows" - there were no cracks on the media and you still needed a license to get Windows to activate, but the cold hard truth is the license agreement prohibits copying/redistribution of the installation media.
Lesson of the day: copyright law is stuck in the 1800's in many ways, so don't test your luck and ask Congress to fix it if you think it's broken.