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This screen shot represents early thinking for the carousel view: a view that would allow users to view the contents of a folder in a flashy, new way. Presumably, pressing the left and right keys on the keyboard would make items spin left or right, accordingly. This feature didn't make it very far, but it was implemented and working to some extent in early builds of Longhorn!
During the early stages of Longhorn UI ideation, countless mock-ups were dreamed up, mocked-up, then sifted through to land on the right candidate(s) for designers and developers to pursue. Here's an example of an extremely wild Longhorn UI concept that never saw the light of day much beyond what you see here.
Every aspect of Windows was being addressed and given a massive facelift, as well as a functionality lift. This is one of countless login screens that were mocked-up by designers working on Longhorn.