Well as always, that can easily be done on Linux. There is even a widget on KDE that lets you do precisely that.

With Wallpaper Engine or similar programs you can still do it. It's no longer a Windows feature, but they have enough API surface to make it possible for other software to implement.

Bare in mind back then was before "Web 2.0", there wasn't AJAX, responsive web design and any of the other technologies we now take for granted. And to add to the woes, most computers still weren't powerful enough to handle running Active Desktop. It was a huge resource drain.

Some of the other desktop integration features of Internet Explorer 4 were pretty nice though.

These days most desktop environments allow for desktop widgets and usually there's a web view widget amongst them. So you can still have your web desktop if you wanted. At least now computers are powerful enough, and the frontend tools are useful enough, that there is some arguable benefit.

This can still be done.

Actually you could, as long as that browser used the Trident engine. Microsoft could have easily shipped a dedicated update application that's just a simple "browser" locked to the windows update website.

Didn't MS still argue they couldn't unbundle IE in the XP days?