Let me try to clarify. There will be an official code repository, and if you download and compile that code, you will end up with a version of ZQuest that can save password-protected quests that are playable on all Zelda player binaries. The password protection will stop casual copying of the quest assets, but will not stop a knowledgeable programmer from "cracking" the quest (by modifying the source code). Also, the Zelda player won't be able to load old quests, in order to better protect these quests.
There will also be official binaries released, compiled with all of the open source, plus some extra code not included in the open source that allows the official binary to read in old quests. It will still be possible for a hacker to crack a quest (as it is now) but since the needed code won't be public, it would take substantially more work.