I am almost 100% certain that the reason non-London passes don't scan on London buses is because London Councils issued ENCTS cards actually have two chips inside them. There's the long number at the front, beginning 633597, which corresponds to the ITSO element; and the Oyster number at the top-right corner of the back, corresponding to the Oyster element. When a London Councils ENCTS gets scanned on any Oyster or Cubic reader, the Oyster chip gets read. The ITSO chip is for other ETMs. TfL buses can only handle the Oyster chips.
Proof:
- When checking the journey history on a TfL-operated TVM (or Passenger Operated Machines, as some of them aren't designed to sell tickets), only the TfL bus taps get shown.
- It is possible to use a non-TfL bus while still being considered "in the system" on Oyster.
- I have successfully downloaded my Oyster tap history from TfL, which only shows the TfL buses.
- That file shows a "product" loaded onto the card, "Frdm Pass Disabled".
- When scanning a blank TOC Smartcard on a TfL bus, it errors with "ITSO Card, Show driver" - same as non-London ENCTS.
- 60+ Oysters on TfL buses show "Freedm Pass E", the same message (with the missing "o") as a real Freedom Pass. This leads me to suspect the "product" loaded onto 60+ Oysters are similar to Blue Freedom Passes. Their distinction of validity between Iver and Reading is accidentally accounted for by those stations not having Oyster capability in the first place.
- When tapping a London pass onto a station without Oyster capability, it errors "75 Oyster card capability is unsupported".
- When tapping a London pass onto a station inside the Oyster zone but out of the Freedom Pass zone, it errors "57 Location not covered by PPT (pre-paid ticket)".