Microsoft employee Raymond Chen says that an encrypted copy of Microsoft Bob is included on the Windows XP CD to take up space.
But Windows XP doesn't take up the entire CD; there is a lot of free space remaining.
Is the story true?
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The story that Chen claimed it is true. But he was most likely joking. Above all it would be impossible to check because Chen — in this supposed joke story — claims the encryption key was created by just mashing the keyboard.
Also the "slowdown" would be by adding 30 MBytes, which is less than 5% data compared to a full CD.
So just assume Chen made an April Fools joke... in June 2008.