I agree with Bloodflowers. Just because no action is taken against an unauthorized translation does not make it legal. By analogy, theft does not become legal simply because a decision is made not to prosecute a thief.
I've said this before. In most countries, translations will probably considered as derivative works. So any translation done and made publicly available with the copyright holder's permission is prima facie illegal. Commercial use is irrelevant. Just look at the cases of unauthorized Harry Potter fan translations.
What does complicate matters are the jurisdictional issues - where the copyright applies and the location in which the act of translating/publishing too place. So some questions that need to be answered:-
1) Where the original copyright is held
2) Which countries the copyright extends to, according to the domestic law of the country, through international agreements and/or registration.
3) Where the potential breach took place, and whether copyright protection applies
4) The laws of the country in question regarding importation of 'pirated' material.
Without more information, it's hard to say for sure. I can make some assumptions/guesses but I'm not sure how productive that'll be.
I remember Spcnet saying some time ago that he was considering restricting the Wuxia Translation forum to members only. Considering all the copyright issues, that would be wise.
On Yufeng's translation, I think that in his enthusiasm he went about it the wrong way. He should have obtained copyright before publishing and selling it, not after it's been put on the market. As it is, any copies sold/bought now are probably illegal.