Why no windowed functions in where clauses?

There is no need for CTE, just use the windowing function in a subquery:

select id, sales_person_id, product_type, product_id, sale_amount
from
(
  select id, sales_person_id, product_type, product_id, sale_amount,
    row_number() over(partition by sales_person_id, product_type, product_id order by sale_amount desc) rn
  from Sales_Log
) sl
where rn = 1

Edit, moving my comment to the answer.

Windowing functions are not performed until the data is actually selected which is after the WHERE clause. So if you try to use a row_number in a WHERE clause the value is not yet assigned.

why can't I use a windowed function in a where clause in SQL Server?

One answer, though not particularly informative, is because the spec says that you can't.

See the article by Itzik Ben Gan - Logical Query Processing: What It Is And What It Means to You and in particular the image here. Window functions are evaluated at the time of the SELECT on the result set remaining after all the WHERE/JOIN/GROUP BY/HAVING clauses have been dealt with (step 5.1).

really I'm looking for the reasoning behind not being able to use windowing functions in where clauses.

The reason that they are not allowed in the WHERE clause is that it would create ambiguity. Stealing Itzik Ben Gan's example from High-Performance T-SQL Using Window Functions (p.25)

Suppose your table was

CREATE TABLE T1
(
col1 CHAR(1) PRIMARY KEY
)

INSERT INTO T1 VALUES('A'),('B'),('C'),('D'),('E'),('F')

And your query

SELECT col1
FROM T1
WHERE ROW_NUMBER() OVER (ORDER BY col1) <= 3
AND col1 > 'B'

What would be the right result? Would you expect that the col1 > 'B' predicate ran before or after the row numbering?