You are right that the license does not even come close to satisfying the OSD. However your reasoning is slightly wrong.

First of all under copyright law, any right given to the copyright holder that is not explicitly permitted by the license is retained by the copyright holder. Therefore the above license retains all copyright restrictions on any binary produced from the source. That immediately fails of items 1, 2, and 4 of the OSD. Incorporating software into product is a normal way of creating derived works, so I'd argue that it fails item 3 as well. Whether or not it fails 1 again because you can't sell source-code depends on how one interprets the phrase "the software". But I guarantee that while the OSI might or might not (probably wouldn't) argue about that, the Debian project would find that utterly clear since they want third parties to be able to sell CDs containing source-code to everything.

It therefore fails the OSD so blatantly as to be laughable. That Intrepid could think otherwise indicates a deep misunderstanding of what "open source" is supposed to mean.

However you have seriously misrepresented what item 6 means. See my post elsewhere in this thread for more on that.

I should add that I am not a lawyer, and this is not legal advice. I'll further add that whoever wrote that license probably wasn't a lawyer either, and probably should consult one before creating any more licenses.