Many states have converted their registration systems to standardized software that "require" certain features like the now-standard VIN format. Vehicle serial numbers that were already in the system were somehow grandfathered in by either adding leading zeros or by a software mod that permitted them to exist as is.
Most of the DMV people one deals with were not even born yet when the current 17-digit VIN system started in 1981, so they simply repeat the "requirement" that all vehicles have a standard VIN. They are simply repeating the current thinking, despite the fact that virtually no vehicle built before that time had a serial number with the now-standard number of digits. You may have to escalate the battle to a DMV deputy director, or some such. A letter to your local state legislator might help, too.