If vendors refused to follow any rules laid down by Microsoft, then Microsoft might deny them the ability to bundle Windows (technically or contractually), and that would potentially force them to look elsewhere for business or to complain about it to a higher power. However, since most vendors are heavily dependent on being able to provide Microsoft products because of the retail climate being distorted in the company's favour, most would be likely to go along with almost anything.
Offering incentives instead of making threats allows Microsoft to look like the good guy whilst making the transaction look like a positive thing, even though the effect of not taking up Microsoft's "generous" offer will result in relegation to a disadvantaged position for any vendor not wishing to play along.
And my example about blank media was concerned with per-processor licensing fees. The "justification" for this was that people would always be running Windows but might refuse to pay for it bundled, and that Microsoft should therefore get a guaranteed fee as compensation for all those "pirates" who couldn't possibly want to run anything else. The regulators put a stop to this, but then Microsoft went and integrated DOS and Windows shortly afterwards, so it was merely a tactical retreat to prevent more serious regulatory measures being imposed that might undermine that very strategy.
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