One thing is _allowing_ installation by removing DRM/copy protection of the software and a different one is licensing such software.
Looks like the navy first tried the software on their lab / pilot deployment. That will explain they bought 38 licences first.
Then, they wanted to use the software on live systems; but they weren't able to do it. Why? Probably the product activation needed internet access and that's not feasible for a military setting (in the worst case scenario it could be used as an attack vector to gain control of the installation). I am just guessing.
I bet the Navy installed by mistake the 558K copies of the software because someone without the right information copied the files into an image server and...
...well, the rest is in the news now.