If you tune the radio to a different station, does the "blocking" position of the loop tuning capacitor change, or does it turn out to be the same position? I am really grasping at straws here, but I am thinking that you might be tuning the loop to the IF frequency (455kHz) of the radio and setting up a feedback condition, that overloads the radio.
Another possibility is that the signal from the loop is exactly canceling the signal picked up by the internal loopstick of the radio... try rotating the radio or moving it away from the loop.

jr

Rotating doesn't change anything. Moving the radio away returns it to the previous signal as without the loop.

The loop shouldn't tune to 455k should it? Do I need to change the turns?

Quite possibly it can tune that low... it is only about 100 kHz below the bottom end of the broadcast band...it is easy to miss the target frequency range by that much... I have removed and also added turns to loops that I have built to get the tuning range correct.:yes:
When you get this "blocking" effect, is the variable capacitor always tuned to near the maximum capacity (plates fully meshed)?
Are you aiming the loop correctly at the desired station? The axis of the loop points to the null, not the maximum signal, for this type of loop.

jr

Last night I tried changing the station, then the cap... seemed to work as it should... go up from say 780 to 790, then retune the cap just a bit and the new station comes in. Today I tried the same thing and it's back to the previous problem. I'm starting to think there's some frequency interfering from somewhere, maybe in the powerline?

So at least some of the time the loop seems to perform as it should.... perhaps there is a source of interference that is overloading the radio during the day...TV sets? computers? CF light bulbs?
Another possibility (not sure of your location) is that you might be close to a station like WTCM 580 kHz (which operates at 50KW during the day but only 1.1 KW at night)... The strong daytime lobe of this station is aimed NE from Traverse city. The 50 KW signal could cause problems at the low end of the broadcast band, if you are close.:scratch2:

http://www.fcc.gov/fcc-bin/amq?list=0&facid=70524

jr

We are sort of close to TC but about 60 mi south.

I'm going to have to try this outside away from the house next time it acts up.