Banned does not mean gone, slavery lasted in the United States long after it was outlawed in the remote regions of the country. The same can be applied to the Empire. (Government can't be everywhere)
Right, but the Argonians kicked the nation of Morrowind's ass after it underwent a severe tragedy... resulting in Morrowind ceasing to exist, so I highly doubt Dark Elves have the power to enslave anyone, at this point, and as far as we know, Dark Elves were the only race to enslave Argonians and Khajiit. That could change, but Argonia is very powerful, now, and I don't think people would dare to attempt to degrade Argonians as the Dunmer once did.