Loopdeeloop Galaxy is accessible from the Terrace observation dome. You need 5 Stars to enter.
This galaxy consists of a single, water-based planet, in the form of a race track.
Talk to the big penguin, who will enter you into a race, on the back of a ray. In this race there are no other participants, and you don't even need to beat a particular time on the clock to gain the Star. You just need to get round the course without falling off.
To control the ray, press A to accelerate, and twist the Wii Remote left and right to steer. You don't use the Nunchuk at all. At least on your first go, don't be tempted to hold down A all the time, especially for the corners.
When you make it to the finish line, the big penguin will present you with a 'gold medal', which is actually the Star. Collect it from the podium.