I am thinking I just add short pieces of string to the loops before I twist them up?
Yep, that is what I do. What ever distance you start from the end of the bundle to begin your loop, go 2" or so longer.
What is the purpose of padded loops?
Spread Out The imPact Of The String. Not So Important With B50, But Moreso When Using "Skinny Strings".
chuckc
I pad the loop ends on my skinny strings to make the loop diameter larger to better fill the string grooves.It may not be needed on bows with modern tips like micarta,but I feel also it will help make a quieter string by better filling the nock grooves.
I also think it makes them shoot quieter. A D97 padded with B50 works well for me and really seems to quiet down my recurves.
"How to Build a Great Bowstring" DVD by Chad Weaver has a good explanation and demonstration of this.