I think Microsoft is cool now. Certainly much better than Google.
The quoted statement had nothing to do with Windows 10 and was specifically do with Microsoft's digital services like Hotmail & OneDrive, which the statement has now been updated to clarify:
"Finally, we will retain, access, transfer, disclose, and preserve personal data, including your content (such as the content of your emails in Outlook.com, or files in private folders on OneDrive), when we have a good faith belief that doing so is necessary to do any of the following:"
Microsoft doesn't care about your local files, but you agree with the generic "to comply with laws and protect our systems" statement if you decide to use their cloud services.