It wasn't necessarily that simple. They were trying to merge a company with a Windows infrastructure with a company that had a Unix infrastructure and were trying to decide on one infrastructure moving forward. But yes, he was the one pushing for Windows.
Definitely an idiot. This was way back in the 90's. Windows was simply not an acceptable substitute for a server operating system back then (though it might be today, for some classes of problem). I'm actually not able to find Max Levchin's deeper technical discussion of the issue (which I remember being a pretty compelling case, and I read it a couple of times back then), but I did find several references from others discussing it, including pg:
PayPal only just dodged this bullet. After they merged with X.com, the new CEO wanted to switch to Windows—even after PayPal cofounder Max Levchin showed that their software scaled only 1% as well on Windows as Unix. Fortunately for PayPal they switched CEOs instead. - http://www.paulgraham.com/startupmistakes.html
I think what is simple is that Musk ignored technical reality based on a personal whim, and seemingly let personal conflicts get in the way of sound technical decision-making for a multi-million (soon to be billion) dollar business.
