When Windows booted, it saw a "Certificate" and a "Serial" that matched the emulated BIOS.
The 161d build was considered a "stable" release. It functioned by:
Here is a deep dive into the history, functionality, and risks associated with this specific piece of "abandonware" culture. 7loader 161d by Hazar: The Legacy of Windows 7 Activation
Are you looking to for a specific project, or are you more interested in the history of software exploits ?