You have to appreciate the humour here: a "chock" is a thick wedge used to stop something moving (eg. the wheels of a car), so "chock full" means full in a very solid way. However, holes are empty things. We do say "full of holes" to mean something has many holes in it.
A "loophole" exists in a contract or a law when one small part can be interpreted specially and therefore make the whole law useless. So you have a law or contract which has so many faults that it is useless.