The two met at Ballmer's request late Tuesday but no breakthrough in the five-year standoff was made during the talks, EU spokesman Jonathan Todd said.
EU antitrust regulators fined Microsoft a record $645 million when they ruled in March last year that the company abusively wielded its Windows software quasi monopoly to lock competitors out of the market.
The orders of the European Commission require Microsoft to share its Windows server code with rivals so their products can better communicate on networks with machines that run Windows operating systems.
"Over a year has elapsed and as of today we are not in a position to say that we are satisfied that Microsoft has complied fully with that decision," Todd said.
He said that in Tuesday's meeting EU Competition Commissioner Neelie Kroes made it abundantly clear to Ballmer that Microsoft had to fall in line quickly.
"Mrs. Kroes said that the Commission expects the decision adopted in March 2004 to be complied with urgently and in full, and she added that unless this was the case that the Commission would be obliged to take formal steps to ensure compliance," Todd said.
Such steps can involve heavy fines. The EU has within its rights the possibility to fine a company up to 5 percent of its daily global turnover for each day that a decision is not applied to its satisfaction.
He said the EU's antitrust regulators were still not convinced that the Windows version the company was forced to produce without Media Player was technically up to standard. And questions remained over whether enough had been done to let competitors be interoperable with Microsoft's system.