Because here the "aber" has the quality of an "and", it is good despite being old. "sondern" means instead, so the sentence would mean "it is good instead of old" and you would need to add a "nicht" infant of "alt"
Though this is certainly the origin of "Motorrad", the word "Motorfahrrad" does not mean the same nowadays. In fact it is rarely used, but substituted by its abbreviation "Mofa". It means a specific class of very small motorcycles (motor-assisted bicycle).