What would you expect to happen? Photoshop 1.0 is an almost unusably basic image editor by modern standards. It doesn't even have layers (they were introduced with Photoshop 3.0 4 years later). Even if the code was licensed in a manner that allowed distribution of derivative works (which it isn't), it's written in Apple's Pascal dialect from the mid-80s and uses a UI framework that's also from the mid-80s and only supports classic Mac OS. CHM didn't even release the code in a state that could be usable out of the box if you happen to have a 40 year old Macintosh sitting around. Here's a blog post showing how much work it took someone to compile it: http://basalgangster.macgui.com/RetroMacComputing/The_Long_V...

I think Adobe decided to release the code because they knew it was only valuable from a historical standpoint and wouldn't let anyone actually compete with Photoshop. If you wanted to start a new image editor project from an existing codebase, it would be much easier to build off of something like Pinta: https://www.pinta-project.com/