Best movie I've seen in years! But in reading through all the comments, can hardly believe no one else seems to have interpreted it the way I did, so SPOILER ALERT!
I believe Howard really did let Frank go, only the ending scene at the diner did not take place shortly after his escape, but rather, many years later. When, like his father, Frank himself had become a dying old man, hooked up on life support.
Frank's greatest fear was dying the way his father had. He feared life support more than he feared death - until he realized it didn't have to be that way. So he had retrieved Howard along with the neurotransmitter machine and had made arrangements in the event he was ever placed on life support.
After Frank's first escape failed, he realized that in sharing his plan with Gabby, in reality, he had shared it with Howard. Gabby was not a manifestation of his own mind as he initially thought; Howard was Gabby. Howard/Gabby didn't just view him as a "friend" either. They had become a couple, engaged in intimate, romantic relationship. As Frank made his escape from the chamber, Howard projected a final illusion of himself as Gabby, abandoned in the chamber, lonely and forlorn. At the console, he asked Frank, "What do WE do now?" along with asking whether he was coming back. As Gabby, s/he had begged Frank to promise and "come find me" after he got out. Gabby didn't mean some unknown Barista, but wanted him to find HER, Howard/Gabby, the AI program, capable of learning, evolving, developing feelings, and genuinely loved him.
Howard was programmed to keep Frank alive and confined in the chamber until he was "processed". So Frank completed his processing by confessing, enabling Howard to release him. Oh, and that "key"? That was the key Frank used to turn off his father's life support system. Had nothing to do with the resistance.
In the final scene Frank retrieves the key, and throws it out indicating his desire to stay on life support. He tells Gabby "I know", indicating he knows where he is, what "she" is, and granting his consent. In telling Frank, "Gabby doesn't even work here anymore", Madeline is declaring her independence from her old programming. She is no longer the old Howard/Gabby, but is her own person, giving their relationship and life together a fresh start.
Of course, that's just my interpretation.