My husband Stephen's surname is LOONEY and I do his genealogy research. The family hails from the Isle of Man, a tiny island in the Irish Sea almost equal distance from Ireland, England and Scotland.
A second possible original name is O'Luinigh, descendant of Luinigh, which means "armed."
The first written reference found was in 1498 "MacGillowny" and later "Lowney" 1640. Other spellings of the name came later. Lewney first is found in 1623 and Looney in 1644. Of course they could have been used earlier--that is just the first record found at the time of the book's printing in 1989. Around that time Lewney and Looney became separate families and both names now exist on Man. There are graves on Man and even in Maughold dating from the 1600s in both names. Spelling did not start to standardize anywhere until the 1700s.
LOONEY is pronounced colloquially [which is often the earlier version] on Man like Luna. This may explain why one branch decided to spell it that way when they moved to Tennessee. Modern pronunciation is Looni.
The name LOONEY is distributed on Man mainly in Maughold Parish. Lonan and Ramsey are the next most popular parishes for the name.