I'm not sure whether you're asking how to crack Fogbugz (or why people is not actively cracking Fogbugz), or how to protect your own software, so i'll answer both.
Fogbugz in particular has a couple mystical DLLs that do license control, and a few other vital things... (Most web based commercial software that you host in your own server work like this, with varying degrees of ASP/Compiled ratios)
Now, you can theoretically find all the calls from ASP into DLLs, and re-wire/re-write them, in the cases where the DLL just does license control.
There's also a Windows service... I'm not sure how vital it is to the workings of the system, but it's definitely compiled (although it seems to be .Net, so it's easier to decompile and crack).
And as usual, you can disassemble the DLLs and just crack them.
But it's probably more work than the cost of the licenses.
Now, on the lines of protecting your own software...
The one thing that Fog Creek does, that in my opinion is INCREDIBLY smart, and it's also probably the main reason why Fogbugz isn't cracked, is to just not give you the source code for free in the first place.
This is resourcefully expensive to pull off the first time, but it seems to me like it's very effective.
You HAVE to buy at least ONE license to get your hands on the product and start checking it out. You can't just download a free version and try to crack it, as with a lot of software out there.
Now, the reason I say this is expensive to pull off is that to be able to actually sell your software, it's a very good idea to let people try it before buying. And the only way to do that without having them download it is to provide it in a hosted environment (like Fogbugz On Demand).
Which is not exactly rocket-science if your software is already browser-based, but if you have a product that people just download and install, then the extra effort to also host it yourself, and automatically add instances (create databases, users, etc, etc) as people request demos, etc, etc is non-trivial.
I'm really curious what they did from the "demo" point of view before OnDemand existed.
Just my 2 cents.