I'm not sure what you thing you found, but it's no what you think.
1) Minilogin has never had encryption in it. Never.
2) World -> LS is not encrypted, encoded or scrambled. The protocol is easily deciphered as the source to that is (obviously) in world and distributed as source.
That said, the crypto in the current public loginserver (i.e. not minilogin) was cracked a long time back by me. I'm sure others have cracked it, since there are many people in the world that are smarter than me.
There is the older loginserver floating around (Hmm, wonder how that got loose?
), it is is the older protocol and the crypto is not different.
I'll not say anymore about the crypto.
If you'd like to share with me what you think you've found, we can discuss it. Who knows, maybe you'll find something useful somwhere.