There is actually two types of "core" code. One is the program itself, consisting of the quest.exe file and various .dll files. These are written using .NET in C# and Visual Basic, and then compiled into the .exe and .dll that you download. You can see the code here (good luck working out what it is doing!):
http://quest.codeplex.com/SourceControl ... #README.mdThen there is the Quest code. This is written in the same language that your game is, and is all on your hard drive in the program files folder (and can be viewed as HegemonKhan says from within Quest). What core.aslx does is to tell Quest to load in the other files Quest needs. I do not think it compiles anything. When you publish a game, all the code you have created is combioned with all the libraries that core pulls in and any others to make one big text file, which is compressed just as a .zip file (and I think you can even change the name so it ends .zip, and then open it up as any other .zip file).
In general script commands are defined in C#/Visual Basic to do the low level (fundamental) things. "Quest Functions" (as the Wiki calls them) are also defined in C#/Visual Basic, but "Core Functions" are defined in Quest code. You can overwrite Quest Functions and Core Functions, but not script commands, by the way.