When coloring in 800,000 pixels on a map of India, Microsoft colored eight of them a different shade of green to represent the disputed Kashmiri territory. The difference in greens meant Kashmir was shown as non-Indian, and the product was promptly banned in India. Microsoft was left to recall all 200,000 copies of the offending Windows 95 operating system software to try and heal the diplomatic wounds. "It cost millions," Edwards said.
Then there's this from the same article that's particularly relevant today considering the (in)famous cartoons:
Another social blunder from Microsoft saw chanting of the Koran used as a soundtrack for a computer game and led to great offence to the Saudi Arabia government. The company later issued a new version of the game without the chanting, while keeping the previous editions in circulation because U.S. staff thought the slip wouldn't be spotted, but the Saudi government banned the game and demanded an apology. Microsoft then withdrew the game.
Then there's the simple language problem that is slightly worse than trying to sell a car named Nova in Latin Ameria (nova means "no go"):
A Spanish-language version of Windows XP, destined for Latin American markets, asked users to select their gender between "not specified," "male" or "bitch," because of an unfortunate error in translation.
Then there's the "oldie" that anybody who has been using Windows since at least, if I recall, WnNT may remember. Prior to I think service pack 2 on Windows NT (precursor to XP, ME, 98... better than Win3.11, WfW... but long after GeoWorks, Win286... :) changing the time zone was enlightening. When setting the time zone on XP now, one will see the world shift. In the past, there was a band of light indicating the specific time zone selected. The problem was this indicated some political boundaries that were in dispute, like the 8 pixel story above. To avoid the politics, one of the service packs from MS changed the time zone selected to not display, and therefore dictate, the specific borders of the time zone.