You have a few misunderstandings here.

Firstly, when people say that reading machine code is difficult to read, they're talking about people interpreting what the code does as a whole. Like you could hand a programmer a common and simple algorithm expressed in machine code and it will likely take them a non-trivial amount of time to recognize the algorithm.

For a machine, it's trivial to read machine code. The entire point of machine code is that it's the native language that the CPU understands. A CPU will be physically constructed to be able to understand it.

Operating systems do not need to interpret machine code to run a program. They will handle the process of launching a new process, but once the programming is running, the OS is not responsible for parsing out individual instructions and carrying them out. That's done by the underlying hardware.

Machine instructions are not turned C# or any other programming language. Code written in a programming language is turned into machine code.