Will, here's wiki on minidisc copy protection.

Copy protection
All MiniDisc-recorders used the SCMS copy protection system which uses two bits in the S/PDIF digital audio stream and on disc to differentiate between "protected" vs. "unprotected" audio, and between "original" vs. "copy":

Recording digitally from a source marked "protected" and "original" (produced by a prerecorded MD or an MD that recorded an analogue input) was allowed, but the recorder would change the "original" bit to the "copy" state on the disc to prevent further copying of the copy. A CD imported via a digital connection does not have the SMCS bits (as the format predates it), but the recording MD recorder treats any signal where the SMCS bits are missing as protected and original. The MD copy, therefore, cannot be further digitally copied.
Recording digitally from a source marked "protected" and "copy" was not allowed: an error message would be shown on the display.
Recording digitally from a source marked "unprotected" was also allowed; the "original/copy" marker was ignored and left unchanged.
Recording from an analogue source resulted in a disc marked "protected" and "original" allowing one further copy to be made (this contrasts with the SCMS on the Digital Compact Cassette where analogue recording was marked as "unprotected").

Of those recorder/players that could be connected to a PC via a USB lead, although it was possible to transfer audio from the PC to the MiniDisc recorder, for many years it was not possible to transfer audio the other way. This restriction existed in both the SonicStage software and in the MiniDisc player itself. SonicStage V3.4 was the first version of the software where this restriction was removed, but it still required a MiniDisc recorder/player that also had the restriction removed. The Hi-MD model MZ-RH1, was the first such player available.