I think most of the posts are almost right
Haven't read all the posts to this but this is how it should be...
If you look at the shiny original Microsoft Windows disc it states to not make copies of its software. I believe Comet probably just ignored this thinking that they were doing a service to their customers in good faith whilst thinking they could just side step this teeny weenie little copyright since they were doing it on behalf of the customer.
Comet could have avoided this legal wrangle if they bothered to contact Microsoft in the first place and requested to have the right to make such copies for their customers as a service. Charging a fee for this service is not the argument in this case. Dell and other companies charge a fee to create discs for their customers so to cover things like manufacturing, power, labour costs etc.
Microsoft is probably not concerned about getting a kick back or anything due to these discs being made but because Comet didn't seek an exemption to start with. This is where the legal wrangle centres around.
So to summarise:
Comet made discs illegally because they didn't seek Microsoft's approval to start with. Therefore Microsoft sued them because of it. Comet could have avoided this by asking for approval to start with.
End result: Comet will settle out of court as they know Microsoft will ultimate win this argument.
This is not petty on Microsoft's behalf. This is simply doing business and in business, you do things properly.