1."why dont cars move out the way when you are coming round to lap them, difficulty overtaking back markers often causes me to lose a race."
They do. In fact, the GPx games are the only ones where this occurs, that I am aware of.
(Are you expecting them to drive completely off the track for you?)
2."why is there no safety cars or red flags?"
Because that is how the game was made.
The lack of a safety car is something that is common to all F1 PC games that I am aware of.
3."why do CPUs not pit when they get a problem?"
It depends upon the problem.
Generally if the can make it around to the pits, they do. Otherwise they pull of the track and park.
The exception seems to be engine related problems, when they just continue racing until their engine blows up and then they finally pull off the track eventually and park.
You'll have to ask the game developers why they chose to do this.