I think the K-loop is a modification to the K-jetronic injection to give it closed-loop (O2 sensor) control and support a catalytic converter. This is probably a grey market car modified to meet USA smog standards.
As far as I know, K-jetronic injection is mostly mechanical, and will work with the electronics disabled, as long as the pump is running. If you want to rule out the fuel injection, dump a bit of fuel or starting fluid into the intake and see if the engine fires.
Are you sure the engine has spark? You need three things -- fuel, spark, and compression for the motor to run.
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