The loop half of key is an item dropped by any monster that has access to the rare drop table. It is also a reward from various random events, and can be found in the chest in Taverley, the gnome restaurant, from Kingdom Management and from caskets. It can also be found in the Barrows chest as a separate item with 100%1 rewards potential.
The loop half of key may be looted from magpie implings as well as its other half, the tooth half of key.
The loop half of a key is used with a tooth half of key to make a crystal key. Doing so will grant you 10 Crafting experience. This is used to unlock the crystal chest, which contains a dragonstone, and other items.