because they are just translating code (that everyone agrees is copyrightable) in a deterministic manner into another medium.

I'm not saying AI art should or shouldn't be copyrightable. One can argue the inputs into the AI generator are copyrightable, but if the output isn't deterministic translation of the input, its a different argument.

The original argument was that AI works wouldn't be copyrightable because they are deterministic, i.e. are just an algorithmic transformation lacking in creativity.

that doesn't seem to be the argument, see top comment (As of now) here

"The courts just take issue with him naming his AI system as the sole author and himself as the copyright owner."

you can't claim a non human as the "author" and claim the material is copyrightable.

the "author" (not the AI) was trying to make a legal point/hack and the courts shot him down.