This would be the expected behaviour seeing how integrated with web functionality the simulator is.
What I take issue with is the fact that I would need to insert the DVD #1 in the drive each and every time the simulator is to start, which seems rather useless since it works in conjunction with a web account anyway which would be more convenient to check the activation status anyway.
Seeing also that most new computers, even desktop ones, do not feature an optical drive at all it seems a bit silly to require such a step: as others have mentioned it's one thing to connect an optical drive for the installation, but another to leave one permanently attached.
This is less of an issue if the boxed version enables one to download the "normal" version, but if this isn't possible I'll also be considering a refund. I'm not sure much can be done on your end but please forward this feedback to MS, if possible.