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?
This story is verified by the programmer, Dave Plummer, who included the encrypted copy of Bob on the XP installer. He talks about it in a video on his YouTube channel here. According to him he needed a large blob of uncompressible data that he could be sure that the company had the legal rights to. Since Microsoft at the time of Bob was distributed by floppy disc, they put a great deal of effort into compressing installers as much as possible, this seemed to him to be a sensible source of such data. And he thought it was funny. He then encrypted the code through several encryption programs before using it and putting in on the XP installation CD.
After encryption that data is indistinguishable from random noise, so the only way to verify this would be to unencrypt Microsoft Bob from an XP installation CD. However, as Dave Plummer states that he has lost the passwords used for encryption, this is not possible.