MG2 and loopMIDI - how to connect question

Is loopMIDI supposed to show up in MG2 Audio Device List?

no, loopMIDI is a target for midi output, it is a midi port, not an audio device.
In standalone, open “interface” left top of screen, then in “midi interface” section select “output”. There you can select loopMIDI for midi output.
You may need to start loopMIDI before starting MG to have it listed.