They don't own the no-CD crack. So technically, they are selling software they pirated.
A crack does not compile anything, but even if you go that road, it will be argued anyway that the patch which is applied is copyrighted.
Now, of course, it's another thing to prove that the patch may indeed be copyrighted...
I guess the economics just haven't worked out to produce a true showdown. Game mods are in my opinion the clear favorite for where this would finally rise to a court-level problem, and clearly there's been a lot of conflict in this space, but nobody yet has been foolhardy enough to build a large enough business on selling some mod that when the owner tries to shut them down they actually go to a full-on, precedent-setting legal battle. (After all, economically, when you get to that level of capability, why not make your own game that you clearly own? That path has been trod many times.)
So, my best answer to your question is, honestly nobody really knows what kind of rights Razor may or may not have to the final product of their crack, especially since it is not the crack itself being distributed.
For a very common example, let's look at a translated book. Copying and distributing such a book requires separate permission from both the author of the book and the author of the translation; the translation is a derivative work, it's covered by the copyrights of the original book and the author, but the translator also holds independent copyright on the translation in addition to the author's interest.
IMHO a derivative work of a program patched with someoone else's code (no matter how small, as long as it meets the very low copyright law bar of 'the slightest touch of creative input') is quite similar.
But the specific case of Razor 1911 might be disqualified by US copyright law section 103a which says "[...] but protection for a work employing preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully."
However, it hasn't actually been settled. I've been watching. The question of whether you can bypass the matter of distribution by distributing a patch you definitely 100% solely own, but then the end-user is the one doing the combining, is not established.
I ANAL of course.
edit: per the sibling comment the crack might not be included, so this might not apply.
The "regardless" part is wrong. It is permissible for the owner of the software to include software for the express purpose of bypassing the protections they themselves placed on their software. Why would you think that the software owner isn't allowed to do that?
It's not permissible for them to make available other people's "software for the express purpose of bypassing the protections they themselves placed on their software" without the express permission of those other people.
Neither statute nor case law sets a lower limit on the size of software that is protected by copyright... but if there were a lower limit, then it is clearly down towards the hundreds (or even dozens) of bytes. The crack certainly doesn't sit underneath that lower limit.
It'd be like purloining just one source code file, including it in your commercial software and relying on the defense "hey, it was only a few hundred lines long".
That is false. They simply have to use the other software, i.e., the crack, within the terms of its license.
In this case, the crack was distributed widely with a permissive use license. My hazy memories of that era specifically mention giving them credit and nothing else. There was definitely no commercial use restriction.
Also, the patches typically had no license terms attached to their usage, or if they did it came in the format of attribution. The implications here is debatable, but we again come back to enforcement to close out the otherwise circular argument.
If you pick up a copy of Photoshop and can't find the license for it, you don't get to go down to the street corner and sell bootleg copies. That defense won't hold when you're in district court fighting to stay out of federal prison, anyway.
And while it's true that this will never be enforced, if there are no principles here, then there can be no guilt from illegally copying these games.
So even if there was a no commercial use license somehow, it feels kinda like jury nullification where it's not explicitly legal, but de facto legal because of structure of the rest of the judicial system.