Encrypted Code: How to Get Your Code Completely Re-Written

I've been in this very situation a number of times. I'm usually the innocent bystander.
I've had to rewrite no less than 3 entire systems because of it. In each case we patched and patched and hacked on them, keeping them hooked up to life support.
Eventually, in each case we decided that the amount of money required to rewrite the systems (including their future maintenance) was far less than what we would spend maintaining them in their current states.
It's a tough pill to swallow, wasting time patching and eventually rewriting anyway. The trick is to incorporate code review into your organization if possible. It should happen often, and very often early in the process. Pair programming can also lead to success if you have the resources.