At least Jim got the facts mostly right, unlike the Escapist Podcast. One thing he glossed over though was that the NDA that was a part of this deal did NOT prevent disclosure, it was just an NDA on the terms of the contract. In other words, they could've said "The following video is brought to you by Micosoft" or some such thing, but just weren't supposed to talk about how much money they were receiving per 1000 views. This is fairly standard and exists even in the journalism side, as I'm sure you'd find out if you asked someone at The Escapist what their contract terms were for the commercials that they're currently running in front of their videos.
In other words, MS was never preventing anyone from disclosing the existence of the deal, and neither was Machinima. It was the YouTubers themselves who failed to inform their audience, which to my knowledge is still illegal in the US since you are required by the FTC to disclose paid sponsorships (which is why it says "Paid Spokesperson" in fine print at the bottom during testimonial style commercials). So regardless of how you feel about MS and Machinima in this, the lion's share of the blame is on the YouTubers themselves, and I wouldn't trust a word that comes out of the mouths of any of those who didn't disclose this.