An "escrow" build means code development is ceased as developers and beta testers hunt for recall class bugs. The escrow code is considered the release to manufacturing code.
"would M$ actually hand over their source code to a third party? i think NOT !!
imagine if Windows source code is leaked and we can all emulate Windows fully on Linux LOL"
Well, they do, on a regular basis, with the pre release of any RC. It is one of the only ways that hardware, and some software, companies could possibly know how to write new code, should there be large changes in the code structure.
This is Microsofts own definition:
"You must be able to recompile the released application at any time after its release. This requires that you maintain the ability to recreate the application build environment"
It is a term being a little misused by the outside world, if Microsoft are staying on schedule. They are not planning an RC2, so the RC1 would, in fact, be the "Escrow"