You have to remember that registry keys are not the same as filenames. Even if they were, the length of file names are not limited by the OS, but by the file system. The registry is a binary file, of which the format was chosen at design time.

Anyway, it sounds to me the issue is with certain client software attempting to read key data, and simply failing to display a key longer than 256 bytes. In turn this would allow certain active keys to be 'hidden' from any client, be it an editor or a spyware removal tool. So, while it hurts me to say this, Microsoft may be right that it is not an issue with the OS.

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Link to this comment: http://www.securityfocus.com/comments/articles/11300/32380#32380