In the last two decades, increased need for high-fidelity simulations of the time evolution and propagation of forces in granular media has spurred a renewed interest in the discrete element method (DEM) modeling of frictional contact. Force penalty methods, while economic and widely accessible, introduce artificial stiffness, requiring small time steps to retain numerical stability. Optimization-based methods, which enforce contacts geometrically through complementarity constraints leading to a differential variational inequality problem (DVI), allow for the use of larger time steps at the expense of solving a nonlinear complementarity problem (NCP) each time-step. We review the latest efforts to produce solvers for this NCP, focusing on its relaxation to a cone complementarity problem (CCP) and solution via an equivalent quadratic optimization problem with conic constraints. We distinguish between first-order methods, which use only gradient information and are thus linearly convergent and second-order methods, which rely on a Newton type step to gain quadratic convergence and are typically more robust and problem-independent. However, they require the approximate solution of large sparse linear systems, thus losing their competitive advantages in large scale problems due to computational cost. In this work, we propose a novel acceleration for the solution of Newton step linear systems in second-order methods using low-rank compression based fast direct solvers, leveraging on recent direct solver techniques for structured linear systems arising from differential and integral equations. We employ the quantized tensor train (QTT) decomposition to produce efficient approximate representations of the system matrix and its inverse. This provides a versatile and robust framework to accelerate its solution using this inverse in a direct or a preconditioned iterative method. We demonstrate compressibility of the Newton step matrices in primal dual interior point (PDIP) methods as applied to the multibody dynamics problem. Using a number of numerical tests, we demonstrate that this approach displays sublinear scaling of precomputation costs, may be efficiently updated across Newton iterations as well as across simulation time steps, and leads to a fast, optimal complexity solution of the Newton step. This allows our method to gain an order of magnitude speedups over state-of-the-art preconditioning techniques for moderate to large-scale systems, hence mitigating the computational bottleneck of second-order methods.