Just XOR'ing the real serial number with a secret key that has exactly as many bits as the (padded) serial number is entirely sufficient, though my experience tells me that at that time, folks tended to do more complicated (and ironically, much less secure, not that it matters much here) things. Basic cryptography literacy wasn't as common then, as unencrypted and unauthenticated communication was the norm, even on most networks.
That it worked at all was pretty amazing :)
312929011101963 2.0D TFA
312929011100925 2.0D [1]
312928072902102 2.0D [2]
312928091704272 2.0D 5.25" [3]
3129289101202698 2.0F TFA
312922022211663 2.0F [4]
752923060122148 2.0F [5]
272929011600468 2.0F [6]
272929052600081 2.0F [7]
The 16 digits seems like a freak.
[1] https://archive.org/details/space-quest-ii-ms-dos-disk-1-of-...
[2] https://www.mocagh.org/loadpage.php?getgame=sierra3pack-alt
[3] https://www.sierrachest.com/gfx/games/SQ2/box/03_m1.jpg
[4] https://www.mobygames.com/game/128/space-quest-ii-chapter-ii...
[5] https://ia802300.us.archive.org/12/items/spacequest_ii_kfx/s...
[6] https://www.worthpoint.com/worthopedia/space-quest-ii-seirra...
[7] https://www.tradera.com/item/340851/630607300/space-quest-ii...