Although I have a valid ~/.theia/recentworkspace.json under the home folder, the command is disabled on Windows.

This problem is easily reproduced in old commits (eg b8f66c71 from September) but does not show in latest master (cefa1fb2). It appears to be fixed.
I verified this is fixed:
Steps:
File -> Open Recent WorkspaceAdditional information:
Windows 10Master v1.7.0@vince-fugnitto Can you close this issue?