greg765,
In answer to your questions.....
A: Yes, exactly that. A loop failure could be any number of things e.g. loss/low gas pressure in loop/s, bad/dirty cannon plug connection etc. As a side note, the Wheel Well loop is salt filled, but that's for another day.
B: Yes. Because by design that's the system (and one loop out is covered by MEL). The less pilot distraction the better and when was the last time you flew and tested the fire system every 10mins or so in flight?
C: Simple, if one loop fails u/s (which you will find out on your next fire test and then use the fire detector module in the EE compartment to isolate the fault), lets say loop A fails, then per the MEL we will pull loop A C/B and collar it, then select loop B so the fire detector module is monitoring the serviceable loop (B) only.
Note: With the the Ovht/Det switch in Normal, both loops (A,B) on one engine must have a fault before the fault light comes on. Master caution light does not illuminate with a fault light.
Hope this helps
McHale.