But given the general security situation on Windows, it would be really nice to have, for example, the browser strongly isolated from the rest of the system.
The idea of using virtualization to enforce stronger isolation between different parts of the system seem like a good one, and it does not appear to be that non-obvious (of course, in hindsight so many things do).
Thing is, there's been third party solutions to handle virtualization-based security for Windows for anyone willing to buy them. People mostly don't. So, Microsoft rightly doesn't give a shit. It's why I tell people to use third-party enhancements if they rely on Windows or switch to Linux/BSD due to greater options for security not to mention what CompSci is cranking out for them.