If it is indeed a LOAN you are taking. Yes you must pay it back. In most plans they will deduct payments from your paycheck.
Most plans allow you to take some or all of the money once you hit retirement age..(59 1/2 in most of them)
This is an in service DISTRIBUTION. You do not pay that back, but they will withhold 20% of the distribution for federal taxes. (some states require state withholding as well)
You would have to check with the plan administrator to see if a withdrawal is allowed.

Just rollover your existing 401k.

At 66 years of age, I would advise against taking a loan. You're older than the mark that's officially considered retirement age, which is 59 and 1/2. You can simply withdraw funds without any extra penalty taxes.

All disbursements are subject to regular income tax rates. So, this could push you into a higher income tax bracket, if you draw out a few thousand dollars or more. Even if you want to do a loan instead, it might not be possible at your age. The terms of 401k loans differ from plan to plan, but you would normally be obligated to pay it all back. At your age, there may be an exception, You'll have to ask the plan administrator directly.

Once again, though, I think you should consider just drawing out funds without worry about paying it back. You can always increase your 401k contribution to replace lost money. Moreover, you're mandated by law to begin taking 401k disbursements by age 70 1/2. Since you're only a few years off from that, it may benefit you to start drawing out funds now.