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How do you get your game to only run when the user has put in a CD-Key? You need to have something stored on the computer that the game checks for before it will run. On Windows, a registry key is an option. It could also modify a file, and the game checks for it before letting players in. Either way it's probably going to be fairly easy to crack unless you put a lot of effort in that may not be worth it (remember, pirates who played your game but never would have paid for it make for some publicity when they talk about it).

How does one store that cd-key? You really have two options. Either you have a pre-generated list of serial numbers (not recommended) or use some algorithm to determine if a sequence matches (which leads to key generators). You can handle these with a server separate from your game for validation/verification, but that just prevents keys from being passed around.

If a pirate just makes a cracked copy that doesn't require the server (or makes a fake server that says any code is correct), he'll still get in. Does having a cd-key still mean your game is 'DRM-free'? It's questionable.

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Technically yes, but people won't be so happy about it being sold as 'DRM-free' if they need a serial number typed in to move it to a new computer. For people who aren't sharing your game around, DRM-free content is usually appreciated for how easy it is to use (just download and play). Do indie devs even bother?

Serial numbers/CD keys as protection are considered outdated in general. Server based methods are more popular now, but a large number of indie games have no DRM (or use DRM built into a service like Steam). Keep in mind that no matter what you try to do, you probably won't stop pirates from playing your game if it's popular (if not in general, then with the right people). You'll slow them down, but a cracked copy will probably end up on a torrent soon enough. You might want to instead either price your game at a point where piracy isn't so attractive, or look into something like crowdfunding/pre-orders, where pirates can't eat into your revenue early on. By this logic you shouldn't lock your house or car, because if people really want to get in you can't really stop them. DRM isn't all bad.