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I can run drush on windows. I added wget tar and gzip to my path and the update command worked when drush was included as a module inside of the drupal install.
Now that i'm using a common install and specifying the path to the drupal site with -r i can't run the update command.
I tracked it down to the untar step. tar is run with the -C option to set the output directory. tar fails to understand absolute paths on windows so when i specify the site root as C:\Users\Ed\Websites\Drupal it tries to use C:\Users\Ed\Drush\C:\Users\Ed\Websites\Drupal. This is a problem with tar. (http://gnuwin32.sourceforge.net/packages/gtar.htm) but i found that the tar included with msysgit is from (http://www.mingw.org/) and that tar works just fine.
I have also tried using a relative path the -r option ..\websites\drupal and drush can't find everything about my drupal install.
So I'm recommending that we change the README/documentation to have windows users install msysgit and just download wget because gnuwin32 tar is screwed up.