Actually "illegal" is a term commonly used by large companies for things in conflict with their policies as a means to deter people from violating their policies through fear.
So it's not too uncommon for people to take it literally, as that is why its worded that way.
Granted, most people know better. But I always ask for clarification when people use the term, because it's one of those ugly little tool words that get taken out of context
~*Sent from a Galaxy far, far away*~
You've got it right. Illegal just is a reference to something that is prohibited. It is not illegal per the law, but it is per their legal contract.