can THEY tell if a movie has been ripped?

Perhaps they're using reverse psychology. If someone decides to start copying the DVDs they've rented, what will they most likely do? Go rent more DVDs to copy. I'm doubting they're that smart though.

hehe... in the old days of VHS certain unscrupulous renters would not only make a dub of the rented tape, but they'd actually cut the tapes open and swap out the spools, so the store got a copy in the original case, and the renter gets an original in a generic case. pretty mean stuff... the kind of genius that honest people would never think of.

That sign sounds like: "Hey, don't rent dvds here if you plan to copy them! Go to another shop, were they don't care! Don't worry for us, we don't need your money". :D

I've been in a similar situation, had to explain to someone that a DVD-ROM is by definition read-only media, and that means nothing I do to it (within reason of course) is going to change the data on it.

my worthless 2 cents 

Spyware & rootkits never delete themselves. Once someone has a little unauthorized power over your system, they want total control. And yes, that scheme is used all the time in games, especially Starforce. Occasionally music cds and movies (Sorpranos comes to mind) but not often, usually they try to break standards as much as possible instead. It's an interesting theoretical question, whether weak read-once sectors could be developed that could test whether a normally impossible-to-reach PGC was read. Of course, to test them you'd have to read them! Perhaps you'd have to use a special very-low-power laser.