Doctor Futurity
Hero
No they didn't prohibit evil as an alignment, they simply provided a lot of context advising against it. It's probably not seen as big a deal today, but in 1989 it was a huge shift to go from 1E which was "anything goes, and the assassin must be evil" to 2E which was "assassin is a thing you can do but not a class, and you can be evil, but its not a good idea and we will de-emphasize the entire focus of the game on campaigns that could allow for evil conduct."I remember them taking out the assassin and removing elements like that. I don't remember them prohibiting evil aligned PCs though
EDIT: I think at some point TSR got more relaxed about this. A good way to contrast how they handled this can be found by looking at the 2E Drow of the Underdark and comparing it to the 3rd edition Drow of the Underdark books.