Almost correct, but artistic depictions of Nazi iconography actually are exempt from the ban (falling under “Kunstfreiheit” - artistic freedom).
The reason why Wolfenstein still had to be censored was because video games were not really seen as a form of art for quite a long time. But AFAIK that has fortunately changed in the last years and you can now legally obtain uncensored Wolfenstein versions in Germany.
Christian Linder, leader of the libertarian party FDP and Minister of Finances in the currently ruling coalition