Does Windows have a skeleton key?

The Seatlle Times reports that Microsoft has been making available a tool for law enforcement that, amongst other things, decrypts protected files on Windows systems.

The tools, supplied on a pen drive that MS calls COFEE (Computer Online Forensic Evidence Extractor), have been supplied to 350 law enforcement departments. One can only wonder how soon it will fall into the wrong hands. And even if limited to law enfoircement, I wonder how soon the tools will be used to unearth materials that are "subversive" to local authorities.

Is this -- the fact that MS maintains secret ways to break security on its platforms -- as scary as it sounds? While I'm certainly in favour of using forensic tools to solve crime, the article suggests that no matter what you do on a Windows platform, MS possesses copies of your keys?

Or... is this simply a matter of MS providing law enforcement with tools that the bad buys already have?