They are RIGHT. ‘Straight’ can mean to be within societal norms. A person who is Straight-Laced is laced so tight they never deviate from societal norms, ever. So, I feel ‘Straitlaced’ is RONG. RONG. RONG!!!
That’s a Fibber McGee etymology.
The expression has been, and therefore is, “straitlaced.”
BTW: This jazz one always hears about “language is always changing.”
Language must change as the world changes. We must have new nouns for new things, and sometimes new verbs.
But there is no virtue in allowing the plain ignorant and careless to have their way—People who hear an expression and start using it without finding out either what it means or how it is spelled.
“Fail safe.” Does not mean “safe from failing.”
“Begs the question.” Does not mean “suggests the question.”