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What's illegal about a $7 windows license?
It violates Microsoft policies
It's not illegal to violate terms of service, at worst it's breach of contract. What policy does it even violate? As best as I can tell Windows licenses are transferrable by first owner provided they aren't installed on another machine.
I'm not a lawyer but it seems like a copyright infringement. Historically Microsoft would of gone after Greg market stuff but now we are the product.
Copyright infringement? The only thing being purchased is the product key, from an online reseller. The software is downloaded from the Microsoft website. It's not an infringement of copyright to purchase a software key from a company other than Microsoft, it's not even a violation of their terms of service as best as I can tell.
You need to be an official Microsoft seller for it to be legal.
Where is that written?
Check the legal stuff
I did, best as I can tell it's permitted. Resale of retail Windows licenses is legal. I can't find anything saying it's not.