what you're probably referring to is the copy protection in most consumer Minidisk (and possibly other types of digital media) systems.
They are protected so that you cannot make a second generation digital copy of anything. You could copy w/ digital signal from your CD player, but you couldn't copy w/ a digital signal from a (digital replica) minidisc.
Yes, the technology can tell. Yes there are ways around it. What one must do is use analog (RCA or 1/8" jacks or such) every other generation.
So... I can make a digital (perfect replica) copy from my CD to minidisc, then make an analog copy from MD to my second MD, then make a digital copy of the second MD to the third MD, etc...
This is designed to keep the perfect digital copies from being overly reproduced and distributed illegaly. Analog recordings aren't perfect replicas... they lose quality with each generation, so there is less concern there.
You could get some of the studio (professional) MD/CD/etc players that do not have this copy protection system inside... but they cost a lot.
now, as far as that specific piece of equipment, I don't know one way or the other if it has the same type of digital copy protection as the MD recorders do... But I wouldn't at all be surprised.