One man's "incestuous OS components" are another man's "clever code reuse". IE is modularized to an almost ridiculous extent, and its modules are reused by everything from the desktop to the file manager to the help viewer to the Web browser to the administration console. Is this really a bad thing? Isn't this the new direction taken by things like KDE and GNOME?
IIRC, the DoJ used a memo from Microsoft's engineers as evidence, which pleaded for unrelated IE and OS functionality to be unmerged back into separate DLLs. Apparantly, too many groups were trying to check out the same DLL. The operative word being 'unrelated'. Unrelated code was being merged together, so IE code could not be substituted, which defeats the purpose of modularity.