That is false. They simply have to use the other software, i.e., the crack, within the terms of its license.
In this case, the crack was distributed widely with a permissive use license. My hazy memories of that era specifically mention giving them credit and nothing else. There was definitely no commercial use restriction.
Also, the patches typically had no license terms attached to their usage, or if they did it came in the format of attribution. The implications here is debatable, but we again come back to enforcement to close out the otherwise circular argument.
If you pick up a copy of Photoshop and can't find the license for it, you don't get to go down to the street corner and sell bootleg copies. That defense won't hold when you're in district court fighting to stay out of federal prison, anyway.
And while it's true that this will never be enforced, if there are no principles here, then there can be no guilt from illegally copying these games.
So even if there was a no commercial use license somehow, it feels kinda like jury nullification where it's not explicitly legal, but de facto legal because of structure of the rest of the judicial system.
It's not permissible for them to make available other people's "software for the express purpose of bypassing the protections they themselves placed on their software" without the express permission of those other people.
Neither statute nor case law sets a lower limit on the size of software that is protected by copyright... but if there were a lower limit, then it is clearly down towards the hundreds (or even dozens) of bytes. The crack certainly doesn't sit underneath that lower limit.
It'd be like purloining just one source code file, including it in your commercial software and relying on the defense "hey, it was only a few hundred lines long".