Academic Dishonesty-When Is It REALLY Cheating?

ConcernedStudent asks: "Recently, 10 of my fellow classmates have been brought up on academic dishonesty charges in a senior level engineering class concerning a recent programming project. Granted, some copied other code verbatim and deserve to be caught, probably moreso for just being that stupid. However, there are those who have been implicated because they referenced code of somewhat dissimilar projects from previous semesters at some point during their design process. As long as the old code was not passed off as their own work for a grade and does not appear in the final draft of the code, is this really considered dishonest? How is this different than referencing a book on the language or some other "legitimate" source? At what point does referencing outside sources become dishonest? Is it just to review historical copies of code (using JFS) which were not submitted for grading to see if questionable code exists in these intermedite draft copies of the program? As this is a somewhat grey area, hopefully someone out there has comments which may help to clarify some of the uncertainty."