This single troublesome incident does not really say anything about the status of PC gaming, sorry. You could of just as easily experienced a red ring of death with the Xbox 360.
I don't think it's true that, statistically, I'd be just as likely to experience the red ring of death than to lose a manual, have to run an installer for a game, or have problems getting software started up. With a console, there would've been a 99.9% probability of just handing the kid the game, starting it up, and leave him to play it.
Steam, or platforms like it, are the future if not already the present of game distribution on the PC. I can't really state why you've had problems installing Steam as I have done it on three of my PCs, but I will say that the installation of games purchased through Steam is almost seamless. On Windows, it means you punch in your password for UAC and let it run. Steam's primary use isn't installing games purchased on disc - it's a marketplace and a community that will hold purchase history in the cloud for easy downloading.
Not so with the Xbox 360, I'll cite Wikipedia on this one:
On February 8, 2008, during the Game Developers Conference 2008, Microsoft announced that the "Failure rate has officially dropped", but without mentioning any specifics.[28] The same month, electronics warranty provider SquareTrade published an examination of 1040 Xbox 360's and said that they suffered from a failure rate of 16.4% (one in six).
Personally I'm on my third Xbox 360 after the first suffered a Red Ring of Death failure and the second had a faulty DVD drive that killed any inserted disk, destroying my copy of Rock Band. It actually convinced me to switch to gaming on the PC, as I refused to trust my Xbox and I didn't want it to fail until I had finished the Mass Effect trilogy.
Yeah, the Xbox360 hardware is unreliable at best. I never used my first Xbox360 for long hours nor in extreme conditions and yet in less than one year after purchase it did the RROD thing. It was one of the first models, so this may have improved, but this does not leave a very good image of the product.
It seems to me that the PC and console markets will ultimately merge, or, the PC market will absorb the console market. However you want to look at it, that seems to be an inevitable conclusion at this point when you consider what Valve is apparently looking to do and the hardware powering the PS4 and new Xbox.
