If phone support issued an encrypted decrypt code that could only be used with your challenge code to decrypt the decrypt code, replay wouldn't be as trivial.
Every CD is identical, so no matter how iD went about this there's only ever one decryption key (per title, I assume) and those keys must either have been encoded in iD support's response, or already stored on the CD. TestDrive sold iD on the notion that the process was too hard for hacker groups to reverse engineer, and it wasn't.