For the sake of argument, let’s say there is this crazy event that recombines all of these different host genes and what you get is a retroviral genome (i.e. a de novo retrovirus). Then what? How does it infect other organisms and cells?
From where I sit, it would have to go through the usual retroviral cycle. It would attach to a cell, expel its guts into the cell, insert its genome into the host genome, express the viral genes using the host transcriptional systems, have the different parts interact and form a viral particle, have that viral particle released from the cell, and then repeat. This would produce new ERV’s in the host genome.
We could also look at modern retroviruses. There are no widespread HIV ERV’s in the human population that I am aware of, so the source of those infections must be exogenous retrovirus.
If we are looking at hundreds of thousands of ERV’s in a vertebrate genome it seems much more likely that they are due to viral infections than a de novo ERV. In between, I can see the virus to ERV to virus route. Viruses produce ERV’s which recombine to form new viruses. ERV’s are known for recombining with themselves due to the repetitive DNA at each end of the genome, producing solo LTR’s, so it wouldn’t be surprising if this could happen between ERV’s.