The typical LCMS narrative regarding this issue is that the Erlangen people were antinomian in some sense, and then they influenced the Seminex folks- then there you have it, 1974 and all that! Among the Evangelical Catholics in the ELCA (notably David Yeago) there's also a version of this floating around- see his essay in the Jenson Feschrift Time, Trinity, Church.
But I think the Erlangen people are a little more complex than that. That doesn't mean I don't think something went horribly wrong, I just actually don't think that it was technically antinomianism per se. If anything the Erlangen people verge on legalism in certain regards.
Here's preliminary theory. Granted I need to read some more, but this is a working hypothesis.
It goes like this: Basically because of 19th century Pietism and Liberalism of the Schleiermacherian variety, theology whether liberal or conservative in that period tended to focus on religious consciousness. This of course carried over into 20th century as well, and is more or less still present with us in a more muted form.
Because the center of theological discourse was in religious consciousness for Erlangen (mainly because the influence of Pietism and Schleiermacher), in their revival of certain orthodox Lutheran themes, their interpretation of them was somewhat colored by this concept of religious consciousness. Consequently, the law and the gospel are thought of as the experience of being condemned and the experience of being forgiven.
Now here's where it where it gets odd. As a Lutheran, one assumes the goal of the gospel is to overcome and do away with the problem of the law. That's ok because it just has to do with one's relationship to God and his salvation, not with every day life or anything like that. You still need to work to be a good citizen and a good parent and whatever.
If one attempts to translate this into the language of religious consciousness, one has a problem. Because the law is the experience of feeling condemned and the gospel is the experience of feeling redeemed, then it means that the gospel's goal is entirely to do away with the law. In other words, gospel experiences do away with law experiences. One, after all, cannot have contradictory religious experiences at the same time. So, when the gospel feeling of being redeemed comes, then the law goes away or only occasionally reappears.
One might think that this would then become antinomianism. That's not quite the case. Since the law is an experience, rather than a concrete, cognitively understandable command, then it means that law (that is, sense of actual, literal commandments-rather than an experience) given and obeyed after the "law experience" has gone away, really isn't law anymore.
Hence, in von Hofmann you have the idea of a "gospel ethic" where the Holy Spirit speaks within you and you spontaneously obey its voice. In Elert "gospel imperatives" (surely a contradiction in terms for classical Lutheran theology!). In Althaus, the distinction between "law" and "command"-i.e. mean law vs. nice, fun, happy law.
Hence, I do not think that the Erlangen people were antinomian per se. They just made some very, very deep mistakes about how one describes law and gospel. Ultimately, this is all due to theology of religious consciousness.