Williams isn’t D1 for skiing, it’s just that the NCAA only has one division for competition. Most schools also train as a co-ed team but they race against those of the same sex.
A division 3 school can have one women’s and one men’s team designated as D1 (like Hopkins has lacrosse and Colorado College has men’s hockey/women’s soccer) but if they do that they have to follow the D1 rules for that sport, including recruiting. Since Williams gets the benefit of D1 skiing without the rules, why subject itself to the D1 rules?