That's true. And India came to the conclusion that to be very very cautious during talks with Pakistan. Pakistan pledged peace on one hand and took advantage of the complacency to attack India at the same time at Kargil. It can happen again, so no demilitarisation in Kashmir on the strength of a word.
What stops Pakistan from capturing Kashmir by force then?
Bullshit. But, the argument succeeded in hiking the Indian defence budget to twice its previous level.
Why did Pakistan deny involvement of the Pakistani military at Kargil.
It was a very cool decision to limit India's response to an act of war. It was the responsible actions of the Indian leadership that prevented a spiral down to a full scale conventional (and then god-forbid nuclear) war.