It's worth noting that the conversation last night (my time) was without me having the benefit of having read the license in question. After some googling, I found a copy of the README, which gives the license as follows:

+--------------------------------------------------------------------------+
|                                                                          |
|  Copyright (C) Rutherford Appleton Laboratory 1990, All Rights Reserved. |
|                                                                          |
|  This source may be copied, distributed, altered or used, but not sold   |
|  for profit or incorporated into a product except under licence from     |
|  the authors.                                                            |
|                                                                          |
|  It is not in the public domain.                                         |
|                                                                          |
|  This notice should remain in the source unaltered, and any changes to   |
|  the source made by persons other than the authors should be marked as   |
|  such.                                                                   |
|                                                                          |
|  Original author:   R T Platon    (RAL CCD)                              |
|                                                                          |
|  Contributors:      C D Osland    (RAL CCD)                              |
|                     A R Mayhook   (RAL CCD)                              |
|                     C D Seelig    (RAL CCD)                              |
|                     N M Hill      (RAL CCD)                              |
|                     K E V Palmen  (RAL CCD)                              |
|                     P L Popovic   (RAL ID)                               |
|                     W K Liu       (RAL ID)                               |
|                     A H Francis   (Page Description Ltd.)                |
|                     W M Lam       (RAL CCD)                              |
|                     A M Reay      (RAL ID)                               |
|                                                                          |
+--------------------------------------------------------------------------+

Based on a quick read, I'd say that that is not OSD-Open.

In our analysis, we can ignore the second clause, "It is not in the public domain"; that's obvious, given that it has a copyright notice at the top, complete with "all rights reserved".

The last clause let's split into two parts to talk about. "This notice should remain in the source unaltered" is a complete statement, even though it appears to be related to the rest of the paragraph; that's just English obfuscating somewhat.

"This notice should remain in the source unaltered." What parts of the OSD apply here? It doesn't speak to the subject matter of any clause of the OSD. We can therefor ignore it in our analysis.

The second half of the last paragraph is "Any changes to the source made by persons other than the authors should be marked as such." How about that?

3, "Derived Works" appears to touch on it -- "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." Well, that doesn't forbid modifications and derived works completely, so we're good up to the first comma. It doesn't fail the second part either, since it doesn't require the modifications to carry a license other then the license of the whole.

That clause may actually be in violation of clause 5, "no discrimination against persons or groups". However, the GPL, amongst other licenses that are OSI-Approved, contains a similar clause, so this is clearly not the intent of the OSI. This clause, and the next one, are somewhat unclear as they do not define "discriminate". The rational provides some hints, however, in as much as they refer to "locking anybody out of the processes" -- that is, removing rights from certain people, so as to make it OSD-Open, but only for some people, or for some fields of endeavor.

We've now gotten past paragraphs 2 and 3 of the license. Lets get to the meat, the first paragraph. This reads

This source may be copied, distributed, altered or used, but not sold for profit or incorporated into a product except under licence from the authors.

Well, first, let's pare it down. The "except under license from the authors" just repeats a concept of copyright law -- the owners of the copyright of a work (IE it's authors, unless the authors have transfered that right) can always grant people additional rights. Even if this were not true, clause 7 of the OSD bars us from considering that hypothetical additional license.

How about this? What bits of the OSD does this speak to? Well, the answer is most of them, since this grants us the rights that the OSD requires -- unless we're selling it for profit or incorporating it into a product. Now we get to the sticky bits.

Lets first just talk about the restriction against "selling [the source] for profit". This is in violation of clause 1, which says "The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources." Well, we were just restricted from selling the software. Does this include when it's a component of an aggregate software distribution? Well, they placed no such limitation, so we must assume so. One violation of the OSD is enough to make it not OSD-Open, so I'm going to stop here, for now, with my analysis of the license against the OSD.

Mostly. I said last night that the license violates point 6 of the OSD, that is, that it discriminates against the field of endeavor of making a profit.

I'm not sure that I agree with that, doing a more careful (but not exhaustive) reading, and some rethinking. (Remember, my comments last night were without reading the license at all, but only Intrepid's description of the license.)

Anyway, on to my other point -- trademarks. I was wrong in many things I said last night. In particular, the Open Source Initiative does not claim a trademark on "open source". It is perfectly legal to refer to your software as open source when it does not fit the open source definition. I can't say it better then the OSI FAQ already does, so I won't attempt to (under 'How do I use the term "open source"'). You may also be interested in 'How is "open source" related to "free software"'.

Anyway, this is a long post, so thank you for reading all the way to the bottom, and I'm sorry for any errors I promoted last night.