The amount in box 1 of the code 1M Form 1099-R is the amount of the offset distribution. You would not have received any of this money since it went to satisfy the loan; you already received this money when you got the loan. A code 1M Form 1099-R should never show any income tax withholding since no cash is actually distributed from the account as part of the offset distribution; there can be no taxes withheld from an offset distribution since no cash is distributed. The offset distribution simply reduces the balance to your credit.
Taxes relative to an offset distribution can be withheld from a concurrent distribution of cash paid to you, but that would be reported on a separate Form 1099-R reporting this regular distribution.
It's not clear what is meant by the letter stating that "my amount was 17K plus." It seem that $17k+ was either the total balance in your account, including the outstanding loan amount (which is essentially one of the investments held in the account), or the remaining balance in the account after subtracting the outstanding loan amount. It's also not clear what you mean by "I actually received 11,833" since, if any amount was paid to you from the account in cash, that's a separate distribution reportable on a different (code 1) Form 1099-R, and that's the Form 1099-R that would show any tax withholding.
