[Hah, too late, but already typed]
Hello joebataz and welcome to these forums. You'll find many helpful people here and a lot of useful information. Make sure that you:
Nope, the looping does not depend on the initial length of the MIDI item. The behaviour is driven by one of the item's properties - "loop source". For that 4-bar sequence it is set so that dragging out the length loops the content. For the 1-bar sequence it is not set so dragging out the length just adds empty space.
You can change the setting by right-clicking the item, selecting "Item settings" the "Loop item source". Or by right-clicking the item, selecting "Item properties" and changing it there.