This protection works by checking for a series of bytes on a track (or tracks) that have no sync marks or standard sectors of any kind. This is impossible to copy with serial nibblers, but a program can be written to run in the drive to recreate these tracks since the patterns are known. It is no problem to reproduce them in NIBTOOLS, or any other parallel or extra RAM nibbler.
Reading these tracks in NIBTOOLS gives you only a very small chance of getting a working image for emulators due to lack of sync/framing on the protection track. All images will work copied back onto a real 1541, because the 1541 acts on a raw bit-stream instead of whole bytes like current emulators so the bit-shift does not matter. Because of the way the drive attempts to lock onto sync, these tracks need to be shifted to make a an image work on emulation with the protection intact. This is now handled by the "-pp" switch when converting to G64.
There are two main versions out in the wild that I have run across and a couple of variants of them.
Version 1: Checks for the pattern $EB $D7 $AA $55 on track 37, then checks for the pattern $D7 $D7 $EB $CC $AD on track 36. This is actually a tougher protection than V2, so I'm not sure why it was changed. If the byte patterns are not detected, it forces the drive heads onto (or beyond, were it possible) track 42, like copied Rapidlok disks. This can jam drives and require service, so perhaps that's why they toned it down. :)
Version 2: Checks for the pattern $D7 $D7 $EB $CC $AD on track 2. Some titles then look for the pattern $55 $AE $9B $55 $AD $55 $CB $AE $6B $AB $AD $AF after the first pattern. It is actually a simpler form of the earlier protection scheme than V1 and contained on a single track.
A seemingly earlier version of this protection is used on a few titles from Access Software. Most notably Beach-Head II, which looks for the pattern $D7 $D7 $EB $AA $55 on track 35. The track is structured identically to the later "PirateSlayer" so it must be related. It identifies itself as PirateBusters 1.0FL. This particular game puts up a little "story" on software piracy that names "Kevin P. Pickell" and "Brian R. Niessen". Perhaps Kris Hatlelid joined the team later.