Complex sentence: Harvard officials were not pleased that Gates and Allen (who was not a student) had used the PDP-10 to develop a commercial product, but determined that this military computer was not covered by any Harvard policy.
Split into simpler sentences: Harvard officials were not pleased that Gates and Allen (who was not a student) had used the PDP-10 to develop a commercial product. The officials determined that this military computer was not covered by any Harvard policy.