Code 1 reports an regular early distribution and is never used to report anything about a 401(k) loan while you are still employed there. If you are still working for the company, it seems unusual that the plan even permit an early distribution unless it was deemed to be a hardship distribution which is not eligible for repayment. Except as a hardship distribution, elective deferrals are not permitted to be distributed before you reach age 59½ or you separate from service. Only portions that are employer contributions or investment gains are permitted by the tax code to be distributed. and most plans don't even allow these to be distributed except for hardship.
I think you need to contact the plan to straighten things our.
