Yeah, that's as it should be, then - you can't add overage players to the roster if you're at (or above) the limit on the protected list; you have to get under 3 there first. The real rules are a little more complicated than that, but doing it this way prevents situations that'd break the AI roster management and avoids unrealistic exploits where you could stockpile overager rights where the real teams would have to let those guys go.
I'll have a look at the trading thing, though; that situation shouldn't block the shop player option, unless there was some further complication like the player being on an NHL contract.
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