The story
Circa 1959, MIT Tech Model Railroad Club. Unknown origin; possibly from Cruft Hall, built in 1915 as a gift from a donor named Harriet Otis Cruft. Cruft Hall was the radar laboratory of Harvard's physics department during the Second World War, which contained much old and unused technical equipment. Possibly blend of crust + fluff, both of which may form on old abandoned things, or influenced by crud.
Etymology from Wiktionary, CC BY-SA 4.0.