But is it illegal, and how much harm has it done? Microsoft obtains the FTDI Drivers from FTDI. The FTDI drivers provided by FTDI are certified to work with their chips. There are devices on the market that use counterfeit FTDI chips, that this update will not work with. In fact, the update turns the chip "off".
Is that illegal? Not that I can tell. Microsoft themselves disable Windows functionality if it determines it's not a genuine copy. Fortunately, there is a utility that you can run to turn the chip back on.
How does this Affect Arduino Users? If you are using recent Arduino boards, not at all, as they no longer use FTDI chips (and came with legitimate FTDI chips when they did use them). If you are using arduino clones, like Sainsmart and others, there may be a non-FTDI (even though it says FTDI) chip on board. The following video explains how to fix your "bricked" non-ftdi interface. No damage has been done, and you can get your equipment working again.