I'd like to add my weight to the Local System Generation issue.
Me as well... Two different games with Known Stars not seeing any loops with ~100 systems explored in each. In one, I had two starting NPRs set for 25-50 LY distance, haven't seen them. Two discovered NPRs doing their own exploring that I can't see, but no reconnections to my areas.
Did a quick test with these settings (does the max number of systems/local chance even matter for Known Stars)?
Max Systems 10
Local Chance 100%
Local Spread 5
No NPRs
Attaching screenshots of some of the settings, plus the map I got using SM to explore.