The lobby key can be found in the locker room of Midwich Elementary School in a locker. Harry Mason examines a noisy locker, finds it empty, and then a corpse and the lobby key fall out of another locker.
After obtaining the key, Harry can use it to attempt to leave Midwich Elementary. Once he does so, battle mode ends.
In early demo versions, the lobby key was called the "Stack Room Key" or "Lobby's Key." In final versions of the game, it was replaced by the library reserve key, which is found in the same place.