Note: All of the following post is with the caveat of AFAIK, meaning this is how I think it works but I could have gotten some things wrong.
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a CD key violation is when more than one turns are submitted from more than one IP address with the same key, which would explain your situation nicely. As long as all installations have different legitimate keys, there should be no problem.
As for why it accepted your turns, the check is performed at the hosting phase, not in turn submission phase. Therefore it cannot warn you.
Especially in situations where it is the same player's various installations done with the method you have used, it is the user's responsibility to see to it his systems are in order. It is not the responsibility of either Illwinter, Shrapnel or the party hosting the game to babysit every participant and clean up after a mess that is not their own making.
As for why DRM is to some extent necessary,
this thread is a perfect example. In an ideal world, it wouldn't be, but reality is far from ideal.