During the launch, they didn't see any reason to abort
The Shuttle was performing as expected. They didn't know about the foam hitting the wing until the film review a day or two after launch. By then, it was too late (assuming for the moment that's what did the damage).
An abort, especially one back to the Cape, is a very high risk maneuver. While they all practice it, no one wants to do it in real life if it can possibly be avoided. Prior to Columbia, many controllers believed it would be safer to abort to orbit and take time to sort things out rather than attempt a return to Cape abort.