I would venture that the NICS database is probably rarely up to date in regards to convicted felons.  Many Jurisdictions still do not report, and those that do probably have some lag time in entering the information.  That is simply a reality of government.  I would however venture that from this groups standards they would want constant live update.  NICS may be unpalatable to some but I do think it has done some good.  It has also at times wrongly inconvenienced people.  Me included.  All in all though it hasn't done bad for what it is designed and capable of doing.

Yes, the loophole they speak of is private sales with no paper transactions.  I suppose this could be equitably fixed, but would require cash outlay which is of course unpopular.  Instead of the overburdunsome laws proposed why not a central NICS station run by the ATF or local cops, they are at all the shows anyway.  You want to buy sell or trade you get a day pass at the door. Buyer and seller verify each others daypass and record the information between themselves as proof of legality.  Should eliminate alot of the crap associated with current proposal and would be alot more cost effective than trying to police these events as Sen. McCain would like.