myrna1901, you have fallen prey to a common misconception. You aren't paying the loan back with money you already paid taxes on. You are effectively paying it back with the money that you were loaned, money on which you have not yet paid any taxes. The fact that you moved money around outside your 401(k) while the loan was outstanding is irrelevant. Money is fungible.
With regard to this loan, the only part that you are paying into the 401(k) that comes from money on which you have already paid taxes is the amount that you pay in interest on the 401(k) loan. However, interest paid on personal loans is not deductible. Further, the loan interest that your 401(k) receives from you is simply a return on an investment held by your 401(k) (that investment being the loan to you that your 401(k) holds). It does not become after-tax basis in your 401(k).
