It sure did have a big impact, comparable to what some people expect to happen soon with AI.
However, I think your framing misses the main point of why many artists today are wary about AI: They are not just being replaced, their own work is used as a building block for the tools that will replace them; and they were not asked for permission and don't even get any compensation for that.
I would argue that:
This is not actually a joke in the strict sense of the word. There is no punchline. The humor is entirely in the context.
Your friend does not understand any of this and is just repeating the "joke" because other people laughed about it at some point. It has nothing to do with the Windows operating system, so if that was part of his explanation he is probably just making shit up to cover his own ignorance.