I've done some reading on DES and Public/Private Key encryption. If the key is DES'd, then they would have to either un-DES it, or re-DES the magic keys source data to get something to compare with. Either way, the DES encryption key would be in the Phatbox code.
If they are using a Public/Private key, they might have been stupid and put the private key in the code to decrypt the magic drive key in order to make the comparison with whatever data they magic key is based on. If they are smart, they are only re-public keying the data from the drive and comparing the new key with the magic key from the drive for a match.
3 out of those 4 possibilities has the key somewhere in the Phatbox code. If we can get the encryption key, we can make our own magic keys. If the key isn't there to be had, the only way I can think of to get around this would be to tamper with the drive somehow.