http://opensource.org/osd-annotated
> The program must include source code, and must allow distribution in source code as well as compiled form.
...
> The license must allow modifications and derived works, and must allow them to be distributed under the same terms as the license of the original software.
...
> The license must explicitly permit distribution of software built from modified source code.
And "physical things stopping you" from running/distributing software are pretty much irrelevant/nonexistent always, this is all about legal restrictions and licensing, not physical things.
Or you're saying it could be considered an open source license if it allowed people to distribute, but not run, executable binaries? Yeah, I don't think most people would consider that open source.
"...but if you want to execute a compiled result of that source code I can still ask you to pay me for it."
morally: yes. Legally? I don't think that there is a law (German law is the one that I know a bit) that allows you restrict the usage of a piece of software.