The difference is that S2HD can actually record your input in other windows.
People were throwing a fit about DRM because S2HD's engine is based on reverse engineering Sonic 2, much of which was done by the Sonic Retro community. Now the community is pissed off that the entire code, which some of them indirectly contributed to, is protected from viewing. Imagine you knew how to code and made a contribution to SRB2. Along comes the last release, the devs have further modified your contribution, but you can't look at what they've done to it because they aren't giving you the code. That would piss you off.
And now that the program has a keylogger, you really can't blame people for not appreciating the alpha.