The WikiLove form started displaying the licensing text in r101548. I've checked out that exact revision and enabled the extension, and it works perfectly for me. I then updated to the latest revision, and it still works (though I've discovered another issue unrelated to this one). I'm not sure why that's not working for you.
Navigate to MediaWiki:Wikilove-terms-link and MediaWiki:Wikilove-terms-url on your wiki. What is on those pages? It should be the same text as on this wiki.
MediaWiki:Wikilove-terms-link both here and on en.wikipedia says "terms" (just a word, not a link). MediaWiki:Wikilove-terms-url in both cases is a "bare URL" linking to wmf:Feedback privacy statement. 96.35.42.62 00:10, 10 December 2011 (UTC)
It's still not working for me. Shouldn't "terms" be a link to something? 96.35.42.62 13:58, 10 December 2011 (UTC)
No, the software is supposed to do the work of creating the link from the text in wikilove-terms-link and the URL in wikilove-terms-url. The messages are the same here, and you can see it works on this wiki. The content of the messages aren't the issue here.
Maybe rebuild messages? I don't know if it will work, but it's worth a shot.