Why don't catholics think protestants are christians? What are the dividing lines?

They may both be bound by legalism and traditions of men, and allow Satan to divide and conquer. If we all become born again, and put aside our petty differences and take hold of God's word instead, we can come together in unity and defeat the devil. Otherwise, he will continue to defeat us. God's blessing is on unity, not division ( Psalm 133 ).