It could be that your loopers have wiggled loose. I read somewhere that it's a simple matter of tightening up the screws.
I just bought a used serger and had to do some maintenance on it before I could get it to work right.
Oh, and for my serger I have to literally "saw" the thread back and forth to get it into the tension discs correctly. If I try to skimp on this step, I always get those darn loops as well.
Good luck.
