I have a 401k, which has funds that were pretaxed and after taxed funds. I also have a loan. I would like to know if I take funds from my 401k after tax, will I GET penalized and can I pay back my loan or take the remaining balance as a distribution. Which way will be cheaper? When I take the funds that were after taxed, will I be penalized even though taxes were paid?

When you put taxed monies into your 401k did you claim them on your income taxes that year? If not, you should have. You can go back and amend your return for that year, but yes, in almost all cases for a regular distribution of funds, you will be taxed.