Is it possible to view/use Windows in any of the Indian languages - Hindi or Malayalam?
Are there some softwares that can perform trasliteration or translation of all the text/writings shown in Windows?
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Microsoft provides so-called Language Interface Packs which provide translations of many (but not all) parts of Windows. Both Hindi and Malayalam are available.
Malayalam is currently only available for Vista and XP, while Hindi is available for 7 as well.
Note, however, that these require a specific language version for fallback - I believe it's English.
Here's a list of supported interface languages in Windows Vista and 7. For India you have: