I took out a 401k loan default?

I took out a 401k loan at my company and paid on it for a couple of years. I found a new job and they told me that unless i could pay it all off in 1 lump sum i had to default. I paid the penalties and the taxes for defaulting my loan and worked for the other company for close to a year. My former employer contacted me with a very generous offer to return so i did. Now I'm back with my original employer and the loan still shows up on my retirement page. The retirement people say i have to repay the original loan because its in default but i'm no longer eligible for payroll deductions and would have to pay it back in after tax money. I feel after i paid the penalties and was Heavily taxed on the default it should be gone. I don't want to pay double taxes on this but i also don't want my retirement held hostage over a $5k old loan. What are my opitions? BTW they said it would have been gone had I rolled my 401k into the new companies retirement then rolled back when i returned.