Maryland can title a car without any title...
"Vehicles Being Titled Because of Court Orders."
http://www.dsd.state.md.us/comar/getfile.aspx?file=11.15.14.10.htmhttp://www.mva.maryland.gov/about-mva/info/27300/27300-37T.htmTitling - Court Order Affecting Ownership
In order to establish ownership of a vehicle when you don’t have the vehicle’s title or when the title has not been properly signed over (assigned) to you, you may need to obtain a court order, such as a final divorce decree.
And "Bill of Sale" is also proof of ownership:
http://www.dsd.state.md.us/comar/getfile.aspx?file=11.15.14.02.htm" (4) "Bill of sale" means a written statement certifying the:
(a) Ownership of something has been transferred; and
(b) Exchange of property for an agreed sum of money or other valuable consideration. "
So MD is not much different than PA. Bith have ways to compel DMV to issue a title and both state that a Bill of Sale is proof of ownership.
Now will the nice lady at the DMV have any idea what the correct way of handling this situation? No. And THAT is the problem.. not the Bill of Sale.