I don't see the problem with A. If you take the software, which can't be patented, and put it into hardware, you can patent the hardware. This seems perfectly reasonable to me, and it holds pretty closely to the original idea of patents: A specialized device that performs an action is an invention, but the act being performed is not an invention. I also don't think that software that emulates the hardware is not in violation of the hardware patent.
I think B is a much bigger problem. Any computer program could be performed with pencil and paper, by getting a big file folder to simulate RAM, indexing it by numbers, and performing assembly instructions by hand with post-it notes as registers. I think the major exceptions are interfacing with other components, including UI systems and networking, and anything with a real-time component.