That's correct. They are citizens, citizens at birth even. But, they are not "natural born" citizens, and neither is Obama.
Unfortunately, Donofrio already attempted to argue this point, and a writ of cert was denied by the Supremes. After 2000, none of them have the stomach to insert themselves into presidential "politics", even if it's a case as profoundly Constitutional as this one. Also, I don't think anyone wants to be the guy who denies America it's first black president. Which is also why I assume none of the well-known and respected conservative legal think-tanks or lawyers weighed into the controversy last fall. They didn't want to be stigmatized as racist.
As for Obama's adoption and what effect it would or would not have had on his citizenship status, it's an interesting discussion point, but as a practical matter as it relates to his Presidential eligibility (he's not eligible for other reasons), is moot.
In the interest in accuracy, I would point out that minor-children can't "renounce" their citizenship. Also, parents cannot renounce the citizenship status of their children, either. And, if another country would bestow citizenship because of said adoption, it too would be immaterial. An American's citizenship rights are governed by American law in the American courts, not foreign law. Interestingly, there is a UN treaty that pertains to this issue (it's name escapes me), but the US and another country (I believe African country) are the only two that aren't signatories to that treaty, FWIW.
As it pertains to Obama, if his dad would have been Barack Smith from Trenton, NJ, and Obama, II. was born on American soil, then Obama, II. would be a natural-born citizen, irrespective of who would have subsequently adopted him and what other nation's citizenship privileges would have been bestowed upon him, because of the aforementioned adoption.
Any person who was a citizen, at the very moment of birth, is a Natural Born Citizen.
This simply means that no “naturalization” process will work to grant eligibility for POTUS.
This simply means that no legal action or legislation or any other attempt at “retroactive” citizenship will work.