The device is powered by static energy in the ionized atmosphere, attributed to the increased solar activity from the resident Star. It is controlled by an advanced panel of cubed "buttons" which emit a complex combination, raising and lowering at various levels, allowing the process to proceed and the static energy to mount. Enormous beams of energy would be fired at the Stargate to cause a time loop.
The Ancient colony was faced with an intergalactic plague which swept the galaxy. Some of the Ancients were determined to beat the plague by attempting to travel in time, so they constructed the loop machine. However, time was looping every ten hours, rather than years. They attempted to increase the loop, but no matter what they did, they couldn't figure out a solution and they all died (apart from those who escaped to the Pegasus Galaxy).
Several millennia later, a scientist named Malakai discovered the device and attempted to finish what the Ancients started in order to succeed, because his wife died and he wanted to return to see her again. However, the time loop not only affected P4X-639, but thirteen other planets relatively close, including Alaris and Earth as well. Through coersion, Malakai shut down the device and left it behind. (SG1: "Window of Opportunity")
After hearing about a lab found by the Tau'ri of an alternate timeline belonging to the Ancient Janus, Daniel tells O'Neill that Janus created the time loop machine. Jade O'Neill states that the machine was one of Janus' experiments into time travel along with the Time Jumper and time travel pods. (SG1: "Relativity")