I don't really see what's unreasonable about their position... As I understand it, this is pretty much what happened...
1) You emailed Stardock to get a refund, as you aren't willing to wait while they attempt to fix the product.
2) Stardock said, sure, just send us the box back with a receipt and we'll give you a refund of what you paid for the box. Stardock then disabled your Demigod account, as you don't want it anymore - you just asked to return it.
3) You have a hissy fit about having to pay to post it to them yourself, even though if this was some other publisher, you'd be out of luck with no hope of reclaiming any cash whatsoever. It's worth noting, if you had bought digitally over Impulse you would have got a full refund with no need to pay postage, but because you bought it off someone else (ie, Stardock received probably less than half the price you paid for it), Stardock are giving you a full refund of the RETAIL PRICE, and you just have to pay to ship it back to them. Seriously, how are you hard done by in this scenario? If anything you should be ranting that the store you bought it from won't give you a refund, not Stardock!
4) Stardock politely say "No, we're not paying your postage"
5) You change your mind and decide to keep the game, but now your account is locked because you're half way through the refund process.
6) Stardock give you the option - either you don't want the game and the refund goes ahead, or you're happy to keep the game and the refund is off the table permanently. They're not a rental service. Sounds fair to me.
7) You come and rant in the forums mean old Stardock, with a very selective version of events that excludes anything that make Stardock look reasonable.
8) (Future prediction, yet to take place) You call me a Stadock fanboy for not seeing what else Stardock could reasonably be expected to do better in the above chain of events.
Did I miss anything?