NFTs are built on a flawed system

What do you mean by that? What is the flaw of the system?

everything built on top of [crypto] is either only a vehicle for legitimate currency

What do you mean by "legitimate currency"? If I can buy and sell things for it, how is it illegitimate? There are plenty of non-strictly monetary blockchain and crypto applications, like arweave, for example, which is a decentralized, permissionless blockchain based data storage protocol where you can store and share encrypted private data like on google drive or publicly host files and static websites, or DAOs, which enable decentralized control and decision making through provably fair voting. Financial applications of crypto are also great. You can buy and sell things privately over the internet without a need for a middleman who will take a cut and can cut you off if the government makes them or they don't like what you're selling, like what happened with wikileaks, pornhub or more recently with steam. Platforms like hyperliquid and tokenized real world assets give people across the world, also from sanctioned and disenfranchised regions, access to global financial markets where they can privately and permissionlessly trade stocks, commodities, etc. without the need for a broker who can block buying and selling, like robinhood did during the GME short squeeze, front run them, and take a cut of their trades. People from countries with high inflation like Venezuela or Turkiye can use crypto to easily and safely store their wealth in a less inflationary asset like ₿, $ with stablecoins, or tokenized gold.

or laundering ill gotten gains.

How do you launder money with crypto? I thought that starting a fake business in the service sector like a beauty parlor or a restaurant was the gold standard for money laundering, tax man don't care as long as he gets his cut.

Signed chains of custody already exist, they could be inplemented and nothing is stopping any of these marketplaces from doing so.

True, but that's still dependent on the marketplace continuing to exist, if it ever disappears, so does your media. I suppose that's also true for a blockchain, but it would be a lot less likely for the digital media blockchain to go down than some marketplace, and since it's decentralized, the community would have a vested interest in running nodes to help keep it alive.

They don't need NFTs, which have a needlessly complex set of requirements, to validate a game's license.

What complex set of requirements do NFTs have? You can deploy them pretty easily these days. You can send them automatically upon payment, and you wouldn't even need a server for that or validation of licenses, as it could all be done in the EVM with a smart contract.

Any service could leverage their pre-existing DRM scheme to let you sell your copy to someone else

This doesn't address the accessibility issue. If the service goes down, you lose the media you "bought", and doesn't work for services without DRM.

Sure but when a company shuts down or decides to shut down the database all the media goes with it. That's what sony just did, all the stuff you "bought" went poof. Not having the ability to transfer the license is only half of the issue.