Man, I'd forgotten all about that stuff! I had a '71 Super Beetle at the time, living in SoCal, & I wanted something to really protect the newly-rebuilt engine. "Airflow & Oil" on those things! With only 2-1/2 qts of oil, I was looking for something more protective than 10-30. I was a Castrol fanatic at the time, but I really liked the graphite idea with that tiny sump.
Amway had a graphite oil additive at the same time as Arco's product. It was a 16oz bottle, designed for 4-6 qts of oil (I think). This was it! I could get 2x-3x the graphite that Arco was offering! I'd dump in 2 qts of Castrol 20-50 & this 1/2 qt of graphite concentrate. Changed it every 3k & adjusted the valves (stone cold) every 6k. Man, I'll tell you what; that was the best running Bug engine I've ever had!
Of course, as **** said, it would probably wreak havoc on an engine with lots of blow-by. I'm guessing that this happened a lot, as folks used it as a cure-all for their ailing engines. (We're always looking for that magic bullet, aren't we?) I'd imagine Arco got WAY more complaints from this kind of use than praise from new engine use.
The funniest part was taking our Skylark in for oil changes & ALWAYS having the tech come out of the back of the shop shaking his head. "How long have you had that oil in there?!?! It was so dirty I couldn't see any light thru it AT ALL!!" I tried to explain it a few times, but everybody had the same fear about the stuff. So I just got used to saying, "Really?" & nodding my head while looking concerned & promising to be better about it. Then I had to tell them to leave it a qt low 'cuz I had "an oil additive" back home. (I had to tell them to leave it a full quart low 'cuz they always overfilled it by 1/2 a qt, regardless of who I used or how much they were filling.)