There were some reports in Britain at least about such co-operation, with the disappearing and reappearing of officers, and the likely reason being fight training in Russia. from what I've read there was some knowledge.
Why didnt they do anything? Like what? Occupy part of Germany? Be more hard arse on Germany about reparations? Embargo? There would have been very little public support for any move, and quite a lot of heat for such actions. Before the Nazis, Germany was actively on a number of fronts getting around Versailles, but overall the WW1 Allies were mostly happy enough with Weimar Republics efforts. Germany wasnt a real threat pre-1933 when this was going on, and overall it was "behaving" , sure there were a range of issues (things German wanted changed, things the Allies wanted) but there was no real prospect of Huge re-armament or likely Military solution to issues. Once the Nazi's came in there was huge re-armament and a more realistic threat, but the Red army co-operation was over, everyone had there own domestic crisis (the great depression). Hitlers early actions, Rhineland, Austria, German Military forces , Race Laws, Suppression were all fairly much "internal" issues that would be hard to whip up support for action on.
It didnt particularly warrant action at the time, and even in retrospect I dont see such co-operation as particularly critical.