First of all, I question the premise that an armistice on the Western Front
would free up significantly more troops for the Eastern Front. IOTL Hitler was triumphant in Western Europe, but he still needed to keep forces there because he couldn't leave it undefended for fear that the British and the Free French would invade it.
For the armistice, an easy chain of events would be the following: the Miracle at Dunkirk doesn't happen and Churchill has died in a car crash a few years earlier. The people who enter power (perhaps Lord Halifax) are convinced that challenging Germany on the Continent was a bad idea, and with the United Kingdom demoralised and the Battle of Britain unlikely to happen to restore British morale, there's a tacit Anglo-German agreement of German hegemony in Western and Central Europe, maybe a ceasefire and maybe a
de jure surrender.
But even then, the leaders of the United Kingdom are people like Lord Halifax (who merely thought that challenging Germany in Europe was hopeless), not like Oswald Mosley (who was actually sympathetic to Hitler). Mosley's British Union of Fascists had precisely zero seats in Parliament; they were never going to get power. So the UK will maintain its armed forces at great strength for fear of German invasion, unwilling to trust Hitler when he's broken his word so many times before. So what can Hitler do? Threaten the UK to give up? Any invasion of Great Britain would have failed catastrophically; the people insane enough to try Operation Barbarossa never even attempted Operation Sealion. No, he'll
still have to maintain lots of troops in the west, for fear of the British betraying him the moment his back is turned (which is very likely).
But let's presume, for the sake of argument, that somehow all of this doesn't happen and Hitler does muster up a major source of extra troops for the Eastern Front.
The Second World War can't be viewed as a simple exercise where the Third Reich puts in more effort to a certain theatre, its enemies do nothing to counter it and it consequently triumphs. If the Third Reich had focused more on the Eastern Front and the situation had been going terribly for the Soviets, the USA would have given more aid to the Soviets (which it could have done practically indefinitely, given how vastly superior the American economy was to the German economy) and the Germans would have lost anyway. Thanks to the United States the Soviet Union had a constant supply of materiel. Add that to the aforementioned logistical difficulties (the Nazis were fighting far away from their homeland, unlike the Soviets, and their logistics were awful) and the Nazis never could have won.
Even if the Nazis concentrated their forces in one theatre, so what if they took Moscow? It would have been a harsh blow to Soviet morale, but the Soviets wouldn't have surrendered when they were fighting an enemy whose goal was the extermination of them all. They had the choice of fighting on and submitting to genocide. The Soviet Union would have just kept fighting until the Third Reich was dead and gone, no matter what the cost. In OTL the Soviets even had plans for what to do if the entirety of European Russia were seized by the Nazis (which never even came close to happening), and they didn't involve any surrenders.
We also can't overlook the fact that this is
Nazi Germany, with Hitler in charge, and therefore automatically includes a degree of incompetence. Quixotic, stupid and pointless actions are the order of the day; just look at what he did in OTL in Stalingrad and Kursk. Sooner or later, Hitler will push beyond what his supply lines can sustain, get cut off and be defeated as Napoleon was defeated; there is no point where the Nazis will simply stop and consolidate their hold, except perhaps the Urals, and the Nazis will never reach that far. The Soviets aren't the only enemy of the
Wehrmacht; the other such enemy is their own dictator. That's why the Allies stopped trying to assassinate Hitler in OTL: they feared that if he died someone competent might take charge.
One cannot model the Second World War as a case of the Nazi economy against the Soviet one, either. It was the Nazis, Italians and Japanese against the Soviet Union
and the United States (plus less important powers, like the British and the Free French), all at the same time. Against either the Soviets or the Americans, the Germans would have been defeated. To attack
both was so insane that only a regime as ideologically blinded as the Nazis would have done it.