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Well is there anything at all to say that "Time Lord" is not simply the name of the species that lives on Galifrey? As far as I'm aware Galifreyan and Time Lord are synonymous.

I'll be damned if I remember where I heard this, but I do recall hearing or reading about some division between the Time Lords and "other" Gallifreyans. It could be that Striker is right, and the term "Time Lord" is specific to those Gallifreyans that achieved their ultimate training, were exposed to the interdimensional vortex, a/o were united with a TARDIS; in this case, it's very easy to write off the usage "Time Lord DNA" due to the fact that "Time Lord" and "Gallifreyan" are used interchangeably in colloquial use, and that the Time Lords (when they were still around) were in far greater contact with the universe at large than the other Gallifreyans.

Alternatively, the Time Lords could be the preeminent sapient species of Gallifrey having either evolved alongside the other Gallifreyans to a higher degree, or having conquered or otherwise came to power over the other Gallifreyans.

... and, I think I recall the reference, vague though it may be. The Tom Baker ep "The Deadly Assassin" calls a portion of the population of the Citadel "shoobugans" and also mentions "plebeians" or a "plebeian class." The latter certainly seems to refer to class only, while the former could refer to a separate species or sub-race.