Cedric uses message 2 from the run and initiates a new run with Trent, pretending to be B:

$C(B)\to T$ $:$ $B,C,\{K\}_{K_{BT}}$
$T\to B$ $:$ $\{K\}_{K_{CT}}$

Cedric picks up Trent’s reply, which gives him $K$ encrypted for himself. He decrypts, gets $K$ and can now decrypt $\{M\}_{K}$ .

An improvement to the protocol would be to make messages more explicit, i.e. by including the identities of the parties in the encrypted part of the messages:

$A\to T$ $:$ $A,B,\{A,B,K\}_{K_{AT}}$
$T\to A$ $:$ $\{B,A,K\}_{K_{BT}}$
$A\to B$ $:$ $\{B,A,K\}_{K_{BT}},\{M\}_{K}$

If Trent checks this, he will not accept message 1 of Cedric’s attempt.