Sure, not system-wide in rote. It opens with "based at least partially on content of the interactive software application". It's not a far leap from that to screen and audio monitoring. Luckily we don't need to make that leap; the rest of the patent makes explicit demonstration of those capabilities:

* "contextual cues from or based on the interactive software application" [0035]

* "OPTIONALLY in communication with an event detection module" (emphasis mine) [0035]

* "In some embodiments the content management system can receive user inputs from a user interacting with the interactive software application to interpret the content of the interactive software application" [0053]

* Regarding inputs to the event detection systems (which are expressly say don't need to run locally): "video information, audio information, game state data, or other information provided by or from the interactive software application" [0065]

* "FIG. 10 is an embodiment of a frame of video information received from the interactive software application that may be used for identifying events within the user's gameplay." [0073] (Note the patent does not limit itself to video games, just interactive software applications; this is just an example in that context.) [0073]

* "In some embodiments, the video information include user input information." [0092]

And, the design explicitly allows remote processing of this information:

* "The content management system may be stored and/or executed remotely to the client device" [0033]

* "the event detection module may be local to or remote from the content management system." [0036]

You're right, it doesn't include the whole screen and systems audio. Just the parts in the application. But Microsoft just adds this functionality to all software, and then there's no effective difference.

And that is extremely likely to me. And feasible. The patent doesn't say this has to be embedded in applications. Microsoft can implement this on any application. And Microsoft is well beyond the benefit of the doubt when it comes to privacy concerns.