I believe the Windows CE that Dreamcast used was not actually the OS but an SDK like the Katana SDK for Dreamcast - making ports of Windows games easier. Like a cross compiler of sorts.
I agree, Sony blew Dreamcast out of the water, mainly due to that DVD drive. I knew more people owning PS2s for the DVD use than gaming. Many were indifferent to it playing games to the point many never bought a game for it.
I know a lot of people have said over the years that Sega should have included a DVD drive in the Dreamcast. They couldn't. When the DC launched, DVD players were well over $500 for a base model. Even when the PS2 launched, they were hovering around $400+ for a base model. It took forever for DVD players to come down in price leaving the PS2 the cheapest method for at least a year or two, if not longer.
RE: Sega Dreamcast Finally Getting Its Halo