..."Could someone please explain how these investors could ignore more-or-less an entire market telling them that the case was unethical, unfounded and untenable..."

Um...hello, your talking about the vaunted free market make a buck that the US is so proud of. Why do you think that people invested in SCO? They thought that they could make back their money through licensing agreements that would be forced upon many corporations.

As far as ethics go, you of all people should realize that ethics will typically go by the wayside when hundreds of millions of dollars are potentially at stake.

If ethics were really that important, the US Patent Office would never have authorized those bloody software patents that are causing so much grief today, and left software vendors with only copywrite to protect their investments.