That is extremely curious behaviour.
You tried the loop current regulator with a new OBi, correct? If you tried it with an old OBi, that was connected to the POTS line without the regulator, it is possible it has been permanently damaged.
With the line port off hook, did you check Status >> PHONE & LINE STATUS >> LoopCurrent to see if the regulator was connected correctly? When things are working propelry, it should be around 25 mA.
Finally, if for testing purposes you have altered any settings under Physical Interfaces >> LINE Port >> Port Settings, you may want to return them to default.