There is no official deadline for students to submit their thesis with their corrections. The student will still have to pay tuition fees but may take until their program time limit to submit the final corrected thesis.
No limit, but they cannot withdraw more than once from the same course.
This should not violate any copyright laws, as the copyright that the U of C archives has is only a partial (non-exclusive) copyright licence. If the student chooses to submit their thesis to the National Library the National Library only has a Non-Exclusive Licence to reproduce theses; "Because the license is non-exclusive you can pursue any other publishing venture that you wish. The license clearly indicates that you continue to own the copyright in your thesis". Unless the department has something more binding the student is free to publish their work elsewhere.