historic:man_made would apply when "ground truth" is that the feature no longer exists. Whilst it still exists, it's right to tag it with the appropriate attributes, and those correctly indicate that the feature is a ruinous example of a windmill

No, still ruinous, but the man_made=windmill tag applies to windmills in all states of preservation or dereliction, not just working windmills. Your other attributes on the note remain, to guide those who need to make a distinction based on such state information.

I disagree - tagging this as a windmill is useful, matches the intent of the tag and its use throughout the world, and adds to the overall value of the OSM map data. The windmill tag is certainly not used to mark only working mills (of which there are vanishly few), nor does it imply any public access to the building.

I suggest the correct action is not to delete the tag, but to add additional tags to further enhance the map - since you point out that this windmill is now used for residential purposes, and is not publically accessible then those would be excellent attributes to record (though I suspect that you could assume non-accessibilty by nature of it being a residence).

Sorry, typo for sculpture. Since the primary reason for this structure seems to be to look attractive, I think it's best mapped as that. (Windmill is certainly the wrong tag - that's for historic mills. Given the poor design, and the sheltered location, I don't think this is realistically for power generation, though I grant you it can rotate in the wind to further its sculptural attractiveness).