Ok update here, and hopefully will clear up some of the BS some people are obviously just guessing at.
IGI2 Patched to 1.1 (SD 2.9)
Back-up CD of IGI2 disk 1 (SD 2.8) runs fine in DVD-Rom Drive.
Back-up CD will NOT run from Lite-ON writer OR DVD-Rom drive, with EITHER CloneCD hide CDR option turned on, OR Alcohol Ignore Media Type turned on!
Game IMAGE runs fine from Alcohol 120% from Virtual drive, with Ignore Media Type turned OFF!
Game IMAGE will NOT run from Alcohol 120% from virtual drive, with Ignore Media Type turned ON!
Before the game was patched to SD2.9, it worked fine from the CD Writer with Hide CDR turned ON, by CloneCD or Alcohol.
So there's your answer. There appears to be no blacklisting of copying software per se, but the new SD is definitely aware of the Hide ATIP in both CloneCD and Alcohol (and maybe other progs that can do this?).