Perhaps they were intended to launch but decided against, I could find no evidence that they worked prior to May/June 2001.  I know there was mention also that the old Steve Prutz maps would include tradeskill locations such as kiln, forge, etc but none of them ever listed a loom.
In your screenshot posted it may have been a flavor item added in for a quest, found 
this mention from June 1999:
	Quote:
	
	
		
			
				The merchant up some platforms from main lift (her name starts with an L and 
she stands by a loom) will make a 
bonded orc vest for you when you give her 2 legionaire shoulderpads, a 
crushbone belt and 10 gold. The vest resists poison and is 
ac8
			
		 | 
	
	
 I really find no mention of using looms prior to the patch, you would think people would say to go use a loom but I don't see that.