Just read on Kotaku and it seems you can actually turn it off fully. MS really need to release a statement with all these answers on, there is so much old/false info out there it's unreal!
Absolutely. A lot of this came direct from e3 issues where they'd say one thing, then Phil Harrison would be saying something else in private interviews. However, I think they've been pretty clear on the Kinect off thing, but the focus of their XboxReveal event was the use of Kinect and booting the system with it and as a result there was a lot of assumption that it was always on.
What MS should have done is a 30-45 minute Q&A at the time and been completely open about everything that way, on the stream.
If they were that clear from minute one, there wouldn't have been such a furore. I feel the same way about the digital way they were handling sharing, it was actually excellent, but the misinformation from multiple sources absolutely harmed the perception of it and, as with Kinect's 'always watching you' focus we had the same focus on 'can't sell, trade or rent?' (even though you could do all of those - renting was being worked on with GameFly in the US.)
It's been a PR nightmare and Microsoft putting out a tag-team of Mattick, Spencer and Harrison has just confused people, especially as they didn't seem to know what the other was saying.