Why release it on Github if they dont allow any improvements or collaborations?
Well, it lets people do security audits, submit bug fixes, and submit feature enhancements ...unless it's no longer being maintained (is it?). Even if it's not maintained, you can still mod it for personal use, which is kinda cool.
I don't know if this is what they were worried about, but maybe they didn't want builds of something
claiming to be WinAMP that was either malware-infected or had bugs, etc. that the original authors would get swamped with complaints about. That's been a problem other media developers have faced (I'm thinking specifically of mplayer, where certain Linux distros stripped out the patent/license-infringing bits and distributed their own custom builds, which their users would then complain about to the original developers).
A simple solution for the WinAMP folks would be to exclude the logos, icons, and other branding from the github repo and simply state in the license that you must acknowledge it's derived from WinAMP (similar to the classic BSD license), but you can't actually call yours any variation on the name WinAMP.