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The loopback traffic should show up on the "Adaptor for loopback traffic capture interface". That works for me (Win 10, Wireshark 3.7.1, npcap 1.60).

What version of Wireshark and npcap are you using? See the Wireshark Help -> About Wireshark -> Wireshark tab for the info

Presumably you're aware that Win 7 is obsolete and no longer supported? The latest Wireshark version to officially support it is 3.2, I'm not sure about any npcap limitations.