They probably did have the retail partners involved in most of the steps of the process. The way I see this working is in the burning process of discs a unique ID number is included in the data. That ID number is the "access code", when installing the disc the XBO checks the number against the confirmed installs on a dedicated server. If the code hasn't been tied to an account it proceeds to check it assigns it to the account and flags it as used. If it was used and still tied to an account it throws the pay wall up. If the person pays the price to install it, it assigns that users a new unique code.
If the user goes to a retail store and returns it as a used game, Microsoft will have a machine supplied where the store can put it into the machine and it removes the ownership from the account it was bound to. And the retailer can go ahead and resell that disc as "new" or close to new. If that user still had the game installed on their console the next time the system "checks" to see if there is any unauthorized software on the machine it will mark that game to throw the pay wall the next time it is used.
The retailers will treat used games similar to the way they sell their digital downloads. They will remit payment to the platform holder in the preferred payment cycle. This way Microsoft and the publishers are happy, the retailers are happy, but the customers end up footing the bill for their happiness.
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