DEI Hornet564T, remote starts, not key

From what you're saying yes the system is disabling the starter.  You should be able to hit the unlock buton on the transmitter and be able to start the car with the key.  If not find the start kill relay and just cut the orange wire of it and isolate it.  The downside of that is you lose the anti grind. 

"now, the H3/2 Gray: (-) hood pinswitch input, zone 1 and the H1/3 WHITE/ Blue: remote start (-) activation input are both spliced together and tapped into the hood pin"   <--- That is not a good idea the WHITE/ blue wire should not be hooked up to the hood switch.  That wire is only really used should you be adding the remote start to an aftermarket keyless or security system.  A - pulse on the WHITE/ blue will cause the r/s to start the car.  Try it you'll see what I mean.  Disconnect it from the hood pin and touch it to ground for a second or do it twice if you have to push the button on the remote twice and the car will start up.,

ok, good to hear about the WHITE/ blue wire, going to disconnect and isolate it right away. one thing tho, this system doesnt have relays at all, i mean they're built into the module. so...i cant trace it back, but it DOES have an orange wire thats grounded...H1/1 orange (-) ground-when-armed output. oh wait the remote start ribbon harness is the one that has the anti-grind and ground when armed output as well. is THAT the one ur talking about?

Yeah the orange or is it ORANGE / black in the ribbon harness is what enables the starter kill feature.  Before you go cutting that wire though make sure you're disarming the system before you start it with the key if it still won't start with the key then by all means just the wire in the ribbon harness.  Like I said earlier though you will lose anti grind and start kill features.