Nelson was not a programmer. However, Mark S. Miller told me that he came up with
http://e-drexler.com/d/09/00/AgoricsPapers/agoricpapers.html out of thinking about how to architect the full distributed Xanadu system. I believe Nick Szabo was heavily influenced by Miller's ideas in his first paper on smart contracts: it references Miller and mentions that Szabo did work for the company started up to commercialize those ideas (Agorics). It's not
quite a coincidence that you think of blockchains.
I don't know how Xanadu was supposed to work on the inside. I do have a dim vague memory of seeing a mailing-list post many years later in response to someone seeking the earliest prior art on using content hashes for a distributed content-addressable store -- from someone in Xanadu. That's all I got in my memory. I want to say they also mentioned Merkle trees, but I may be confabulating. (I'd be surprised if Miller didn't know Merkle personally -- they both worked with Eric Drexler, and Drexler invented his ent just a few years after Merkle patented his tree.)
Robin Hanson published a paper back then with a non-Xanadu design sketch with similar goals: http://dl.acm.org/citation.cfm?id=43938 but it's paywalled. (Hanson also got involved with Xanadu for a little while.)