Well, here is Microsoft's response:
Thank you for contacting Microsoft Online Customer Service.
I apologize for any delay in our response to your issue. Due to an increase in requests, our response time may be longer than usual. We appreciate your patience.
I understand that you wish to know about the Windows Genuine Advantage. I realize your concern.
I would like to inform you that the Windows Genuine Advantage (WGA) program is part of Microsoft’s on-going effort to protect its customers and partners from counterfeit software, and increase customer awareness of the value of genuine Windows. Windows Genuine Advantage is a program designed to highlight the value of genuine Windows software over counterfeit copies.
The WGA program creates an improved Windows experience for users who have a genuine copy of Windows. Windows Update is a benefit that is only available to customers who are using a genuine copy of Windows.
The WGA validation process does not require or collect any personally identifiable information. Customers who have a genuine copy of Windows and who choose not to complete the validation process can still obtain critical software updates by using Automatic Updates.
For more information about genuine Microsoft software, visit the following Microsoft Web site:http://www.microsoft.com/genuine/default.mspx
For information about Windows Validation, visit the following Microsoft Web site: http://www.microsoft.com/genuine/downloads/WhyValidate.aspx
To review the Genuine Windows validation FAQ, visit the following Microsoft Web site: http://www.microsoft.com/genuine/downloads/FAQ.aspx
It seems to me Microsoft kind of went around the issue and just wanted to tell what WGA does in a computer. Well, I have done as good a job as I can do on my end and if you find out on your end why the Windows components want to keep accessing the Internet then let me know. It seems to me that Microsoft wants to keep a constant eye on each and every computer that is connected to the Internet. Maybe, this is kind of like George Orwell's 1984 but perhaps I am taking it too far. What is your opinion, Neil and others if you want to add your voice.