To get the answer to your questions, you have to understand the way online advertising is arranged, below is a much simplified description.
Client goes to Online Advertising Agency with product which they wish to push. Sometimes with, sometimes without an existing advert. If without, then an Ad is produced for them.
Online Advertising agency then deals out Ad through a number of "Associates" who buy space on various websites where Ad will hopefully be seen. Or further sub let the Ad through another level of Associates.
The end site owners and Associates are paid on a clickthrough basis, ie. For each click on the Ad they host, they are paid a commission. More clicks, more pay.
Now we get to the nub of things.
Unprincipled "Associates" or Web site Owners (or both) figures they will get more "viewers" and therefore more click throughs, and therefore more money, if they automate the process. So enter the Malware pop upper, which directs users to those Ads, clicks on and opens them, thus providing a greater throughput of clicked Ads and therefore more money for the end web site owner or Associate.
They're not bothered whether the customer is outraged by this behaviour, because they are paid by clickthrough, which is entirely removed from customer purchasing decisions.
So, answer 1, customers won't buy from things advertised this way, but the "Associates" and Web Site Owners are still getting paid so they don't care.
Answer 2, why would anyone want to be associated with this kind of sales technique? Because the real life sales model is much more convoluted than the much simplified scenario I've described above, and often the person who placed the Ad is unaware of just what is going on. As for the others, they collude to a greater or lesser degree because they make a great deal of money out of it.
Answer 3, because of the convoluted nature of the business, it is difficult to assign blame, and even more difficult to bring a successful prosecution. However there have been some successes, and the fight is by no means a hopeless one.
Hope this explains a little. There will no doubt be others along who will have a greater knowledge than my own limited understanding of the problem, and who can describe things better to you.