On the input to this alarm PCB circuit there are two MOVs between each line and ground. If the input is isolated from ground (as per mains line standards requirements) how can these do anything ever?
The power input may be completely isolated from the mains (eg. through a simple transformer) but that system is still intended to be properly earthed, hence the MOVs to the earth ground potential terminal.
However, even in some application where there is
not an earth connection, a MOV, for example, across the power input connection, will stil protect against a spike above the MOV voltage but obviously not protect against the whole supply somehow being way above earth ground potential.
In this case, even if the ground to that first earth terminal on the connector block is not connected to earth (or gets cut, etc.) and there wasn't the protection there across the input (the one that blew up) the two MOVs in series would still provide clamping starting at 90V in this case since they are 45V each.
I'm curious where you're getting the mistaken idea that this system would not be earthed? It is clearly supposed to be earthed! Anything like it would always be designed to be earthed...