You need internet connection to unlock your bought licenses of course.
After you did unlock your S1/S2/S3 account, you can set up LAN-only games I believe (without Internet), but I never did nor am I willing to verify it for you. Maybe there's need for connection somewhere hidden.
There's some manual here (maybe not outdated too much):
You can try to set up demo version first to see if it works for you, and buy licenses later. Also I don't know how many licenses you need for LAN, whether per-seat, or some seats can use the same license, but if you plan to use it regularly, you should buy license per seat (for kids too).
As others mentioned, stop the VOB/crack nonsense, it hurts developers, and this game is great as is (without stupid cars from reality, and even in demo-only mode). Also it depends whether you want to race and try to learn to drive (then original LFS + demo works quite some length), or you want just to drift/cruise, then you are already foolish enough in my eyes.