TLDW: there is very little information but he speculates that either game developers struggled to use it, or Microsoft were delayed in finishing it in time for the DC launch.
So what exactly happened here? While there’s no definitive reason provided, we can conclude a few things: according to a CNET article during the launch of the Dreamcast, developers were having trouble adapting to Windows CE. Rainbow 6 was intended to be a launch title for the Dreamcast but it was delayed. However, the company missed the date because of issues surrounding the use of Windows CE according to a spokesperson. One factor in the delay was a lack of experience in targeting Windows CE based software for use on a game console. Sega’s then vice-president of third-party development said, “in the lifetime of Dreamcast products you’ll see a lot more folks with PC experience building Windows CE titles,” and he estimated around 30% of Sega titles will be Windows CE based. In the end that percentage was closer to around 13%. Other sources suggested that Microsoft was delayed in bringing Windows CE to the the Dreamcast with its development taking over 2 years to complete and it simply wasn’t ready in time for the Dreamcast launch.