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Does the firmware need to be decrypted to run on the device? If so, do customers get the keys in a way that malicious users (who can also be customers) can not?
Since the history is going to be checked much less often (on password change vs on login), wouldn't you want an even slower hash? Would there be any security risks with using eg. 1,000 rounds on the current password and 10,000 rounds on the older ones?
A Windows reinstall wouldn't effect BIOS viruses or viruses that infect peripherals (like a too-smart USB keyboard). The ultimate "nuke it from orbit" solution is to recycle the computer and get a new one.
