What makes it illegal to develop software that will bypass computer codes on copyrighted material?

The Copyright infringement laws. A copyright means that someone owns that body of work. If you copy that work , without the owners permission, you are breaking laws. There are severe penalties for this, especially if it states that the work is under a copyright. The software you speak of, is designed to do something that breaks the law, hence illegality.

In this Case you sir are wrong!

The Answer is: Digital Millennium Copyright Act

The Digital Millennium Copyright Act (DMCA) is a United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures (commonly known as digital rights management or DRM) that control access to copyrighted works. It also criminalizes the act of circumventing an access control, whether or not there is actual infringement of copyright itself. In addition, the DMCA heightens the penalties for copyright infringement on the Internet. Passed on October 12, 1998 by a unanimous vote in the United States Senate and signed into law by President Bill Clinton on October 28, 1998, the DMCA amended Title 17 of the United States Code to extend the reach of copyright, while limiting the liability of the providers of on-line services for copyright infringement by their users.

On May 22, 2001, the European Union passed the Copyright Directive or EUCD, which addresses some of the same issues as the DMCA. But the DMCA's principal innovation in the field of copyright, the exemption from direct and indirect liability of internet service providers and other intermediaries (Title II of the DMCA), was separately addressed, and largely followed, in Europe by means of the separate Electronic Commerce Directive. (Unlike U.S. federal laws and regulations, the execution of European Union directives usually requires separate legislation by or within each of the Union's member states.)