To create a VR, a series of photographs are stitched together. The photos can be taken either on film or in digital format, but if film is used the negatives need to be scanned and then saved in a digital format. Digital is much easier - trust me! I have created them both ways.
I first started creating VR's a dozen years ago when I came to Cal Poly Pomona as the University Photographer. The technology was extremely new. In fact, Apple had began developing QTVR's only three years earlier.