Torrent SP2 'Experiment' Ends → Why is microsoft up in arms?

It's free bandwidth. I wouldn't be complaining if I were them.
Donating your bandwidth is no different than donating your unused CPU cycles to folding or SETI.
Use it or lose it. No need for unused upload bandwidth in a world hungry for it (unless you're a Comcast subscriber.)
About security risks... What security risk? Every torrent is a signature like an MD5, so that's unlikely.
Linux has thousands of distribution channels (including torrents), and just about anyone can get their hands on the core. No security complaints yet.

Telling Microsoft "told you so" is old so I'll just say...
You can pay for lunch now, Billy and Steve.

Perhaps because Downhill Battle didn't ask for Microsoft's permission first? If someone took an application I wrote and started distributing it on their website without seeking my permission first, I'd be upset also. If I create it, I get to say how it's distributed not anyone else.

You think the millions of users know how to check the MD5?

Read the countless stories of users just not being able to comprehend fully (even after told countless times) about not clicking here, not doing this, not doing that.

How do you expect under a channel that is completely uncontrolled to be sure that no system was infected or crippled or whatever else because of the patch.

This is an issue with making sure that the SP2 gets installed properly and securely.