The good news is that people inside MSFT are considering the complexities of WinFS.
Dare Obasanjo writes...
things aren't as easy as one suspects at first glance at WinFS
Unfortunately the notion that a solution could in any way resort to "even if it is just coming up with application design guidelines" is *completely* unacceptable for a 21st century file system or database.
There is a philisophical schizophrenia taking place inside the head of WinFS. Is it a file system? Is it a database? Is it cheap and simple? Is it transactional and robust?
I personally do not believe WinFS should be cast as a file system at all. Rather WinFS should be a complete rethinking of what a database is. WinFS should eat the lunch of SQL Server, not NTFS. But the technical problems are deep, and the business of introducing a replacement for SQL Server are enourmous compared to a replacement for NTFS.
However, any practical use for WinFS by *definition* makes it also a replacement for many current uses of SQL Server. Unless you just want a way to store pictures. That's trivial, and that alone is not the heart and soul WinFS being presented to us.
As for the security problems, the answer there is also obvious yet painful. A real innovation in Longhorn would be to use "trusted computing" in the hardware and software to implement a capability-based operating system.
XAML, camel. Don't just play at being engineers. Create something really useful.