Loon was a type of animal lifeform, a bird from the planet Earth. The name "loon" evolved into a Human slang term for a mentally ill person.
History and specifics
In 2264, Montgomery Scott, who had been possessed by a Vulcan emotion, wondered why he was laughing like a loon. (TOS comic: "The Brain Shockers")
In 2270, Captain Hunter told Captain Kirk that most people thought Georges Mordreaux was a loon. (TOS novel: The Entropy Effect)