So uh....
I see there's the less savory route of hacking/virtual illegal stuff.
How does that work?
And also, does it still occur/is it a big problem in the universe?
That depends on "How". For the most part, those like Corpse Collector are just straight up screwing around with the game, using abilities that don't exist and other fairly blatant hacks like teleportation. Those like Dark Wraith are more subtle, and that's because she technically has administrator privileges: she's not hacking so much as she's altering the game to suit her whims. Obviously she's not suppose to have Admin Permission, but no one but her knows that. Plus she uses her hacks to figure out who you really on in the real world, which she uses for her own ends since the Erasers, a more "Elite" branch of the Sweepers, sometimes take justice into real life.
Otherwise trying to hack Deep Ground isn't as simple as downloading a program like a trainer or whatever. It, at the very least, requires direct permission from the database itself, which requires that you had backpacked into the system at some point (Which Retsu did) or have inside help. Basically it's kinda complex, and the easiest way is to muscle your way in and threaten someone into doing stuff for you and keeping quiet at the pain of death.