Someone who's loopy is batty or nutty — in other words, not the picture of mental health. You might get so tired after staying up late to study for a test that you start to act goofy and giggly and a little bit loopy.
Even if you are completely sane, you can still act loopy when you're embarrassed or tired or just being silly. You might love the circus because of the loopy music and the painted-on, loopy smiles of the clowns. Or maybe you're a fan of loopy comedies, films that feature characters with harebrained ideas that backfire in ridiculous ways. This informal meaning dates from the early 20th century — earlier, the word meant "deceitful."