The Nurse With Wound list is one of the greatest pieces of fieldwork ever conducted in music. It is a secret handshake, a map, a wishlist, and yet it still contains mysteries. A list of 291 artists, many of them unknown and unknowable pre-internet, was included in the 1979 debut album by the industrial group Nurse With Wound. Now 40 years old and legendary in underground circles, the label Finders Keepers are undertaking the Sisyphean task of collecting and compiling one track by every artist on it.

Nurse With Wound were associated with industrial music from its inception, although they were more interested in a surrealist sonic bricolage than the brutalism and didactic politics of their peers. While the group is now just Steven Stapleton, when the list was written it also featured John Fothergill and Heman Pathak. Along with studio engineer Nicky Rogers on guitar, their debut Chance Meeting on a Dissecting Table of a Sewing Machine and an Umbrella was pressed in an edition of 500 after being recorded in six hours; Fothergill had owned a guitar for four days. Stapleton says they didn’t expect to sell any – his cover art depicts a woman with whip and gimp mask, large breasts spilling from a full-body rubber suit. Unsurprisingly, some shops wouldn’t stock it.

French prog band Mahjun. Photograph: Finders Keepers

Inspired by the cover art on a German free jazz album by Wolfgang Dauner, which named all his inspirations and influences, the NWW list, included in the sleevenotes, was a cacophony of radical mind-altering music that Stapleton says had “broken barriers and been outlandish, or was completely and utterly original,” a map of their discoveries in European outsider music, one drawn as that music was being made. “We honed it down and put it in,” he says. “And then nobody gave a shit, basically”.

Going back to the records he loved for the Finder’s Keepers compilation, he says he is still blown away by how fresh all this music sounds, and is getting reacquainted with records he used to know by heart. “That period was just so fertile,” he enthuses. “It’s not really nostalgia for me, it’s more like revisiting old friends.”

The list is krautrock heavy, with French prog, British improv, outré Italian pop, post-punk, noise music, and stuff that doesn’t easily fit anywhere, such as the mind-blowing vocal cut-ups and collages of Ghédalia Tazartès, or the rapturous jams of Japanese performance group Tokyo Kid Brothers. The NWW list contains irresistible band names such as Horrific Child, Lard Free, and Ovary Lodge, alongside legends like Yoko Ono and Frank Zappa. Stapleton once said some of the names didn’t exist, although Fothergill disputes this. In fact, Stapleton admits they’re both right, as one of the groups (he won’t tell me which) never recorded or released anything bar one track, so whether they existed is debatable.

Go deep enough, and the stories behind these groups, whether legendary or forgotten, are wormholes in themselves. A psych jam by the Yo Ha Wha 13 will lead you to the story of a free love cult that invented organic eating. Dig around the British improv entries and you’ll eventually find an album by TV comedian Vic Reeves. Dutch drummer Han Bennink (still very active) has been known to play drum kits made of cheese. You’ll hear Pierre Henry, who inspired the Futurama theme; the French Nico in Catherine Ribeiro; the French Ella Fitzgerald in Colette Magny; and Alvaro, dubbed “the Chilean with the singing nose”, an exile from the Pinochet regime who played with Joe Strummer.

Facebook Twitter Pinterest Jean-Pierre Massiera, AKA Horrific Child. Photograph: Finders Keepers

When the list was written, Stapleton, Pathak and Fothergill were already well schooled in the art of digging at home and abroad, scouring the racks for anything unusual. “Every tiny snippet of information you could find back then was really important,” explains Stapleton. Krautrock had replaced his teenage cacti obsession some years before – in David Keenan’s book England’s Hidden Reverse, he describes how he dropped out of art school and spent a year “surrounded by my fish tanks, listening to Amon Düül and wanking. That was the year I lost interest in cacti.” After this epiphany, he went to Europe aged 17, where he stayed with producer Conny Plank and roadied for Guru Guru, the Germans apparently intrigued by a strange British teenager who was interested in their music when nobody else was.

It took until the 90s for the list to catch on, but when it did, its influence spread far beyond what Stapleton and Fothergill could have expected. Forty years later, it’s responsible for forging a scene in itself and for emptying the wallets of record collectors the world over. “It became a directory for record collectors, and then, as the list became popular, those obscure records were reissued on CD,” Stapleton explains. It’s been covered in depth on underground radio stations WFMU and Resonance FM, even on the BBC. Legendary California chain Amoeba Records has shelves dedicated to it. European online record shop SoundOhm has an entire section, as if it was a genre in itself – when contacted for this piece, the store’s owner Fabio Carboni compared its impact to the invention of the sextant in maritime navigation. Keenan describes it as “the ultimate outsider musical education”.

Finders Keepers boss Andy Votel – who wanted to call the compilation NWW That’s What I Call Music – describes the list as a “phantom” in record collecting, because the NWW tag haunted the racks. “As that very male record collector thing goes, you want to think that you’re on to things before other people,” he says. “But Steve Stapleton was always there first. It was before DJ culture, it was before mixtape culture. That makes it truly amazing.”

The NWW list doesn’t cover a particularly broad demographic, but it wasn’t supposed to. Like Julian Cope’s Japrock and Krautrock samplers, or the Her Noise map, the NWW list is not about a finished whole, but about ecstatic beginnings for curious ears. It is about beginnings for Stapleton in another way, too – he has inadvertently played a long game in record collecting, and is now using the proceeds from selling his rare vinyl to build a house in Clare, Ireland, “near the Father Ted house”.

“I have maybe 1,000 albums left, but most of the rare ones are gone,” he says. “I could not believe the prices of some of them.”

• Strain Crack & Break: Music From the Nurse With Wound List: Volume I (France) is out now on Finders Keepers.