A deemed distribution (code L) does not satisfy the loan, it only makes it taxable.  When you pay off the loan, the payments made to pay off the loan after a deemed distribution become after-tax basis in the plan so the money is not taxed again when later distributed.

If this happened after you left service with the employer providing the plan, the loan should be satisfied with an offset distribution (code M) which does satisfy the loan.  You have until the due date of your tax return for the year in which the offset distribution occurred, including extensions, to come up with the money to roll a code-M distribution over to another qualified retirement account like a traditional IRA to penalty and continue to defer taxes on the offset distribution.