"I ways hoped it was an urban myth "
I went to a well known boarding school, I can confirm that it's not a myth but was a hazing thing when you moved into a senior house. I didn't eat the biscuit, but the poor kid who came last was scarred for life.
In think this game originated from one of the Forces. Might be wrong but my ex RAF mate first told me about it. Never played it but might be tempted if it was soggy Chucky kitkat or soggy Snikers