[PZXjoe]

How could they physically loan out Amys "money" if the total "money" created via loans is 10x her deposit?

The problem in that analogy IMHO, is that the original $1000 couldn't have just been FRN's if FRN's is what was loaned into existence because of fractional reserve lending.
ie something of substance had to exist first, that was then expanded upon via the money multiplier.

No, the 10x money supply appears digitally as demand deposits. See my previous post as to where the actual paper FRNs would be.

As to your second point, FRNs are not loaned into existence. Paper bank checks and digital entries are what is "created".