Dennis Levy, I am a professional engineer. I know about Hyperloop.
Updated Sep 18, 2015
The compressors envisaged in Musk’s Hyperloop_Alpha.pdf proposal are axial compressors, much the same as used in high altitude jet aircraft, but instead of being powered by the turbine at the exhaust, they are powered by electric motors. Such compressors have been produced for research into electric powered jet aircraft, but have never been produced commercially. In Musk’s design there are two compressors with an intercooler between them. The reason for this is because if only one compressor was used, the temperature generated in compressing the air would exceed the limits that the materials of the compressor blades could survive. This intercooler solves one problem but introduces another: The heat has to be removed somehow. In the proposal this is done by dumping the heat into a giant steam pressure vessel, probably bigger than the capsule itself. It seems that at this point Musk decided that this was a rather difficult problem and chose to abandon further development.
The SpaceX Hyperloop Pod Competition is clearly focused on proving that air skis can support a Hyperloop pod. However the competition bypasses the more difficult heat dissipation problem by making the test track very short (1 mile). The compressor will not reach self-destructive temperatures in the few seconds needed to reach the other end of the test track so no cooling is necessary. If the test track had been circular then pods would need to solve the cooling problem or they would melt after a few minutes.
While everyone expected the test track to be a loop, nobody can accuse Musk of lacking strategic thought by instead choosing to build a short straight test track.
Musk’s SpaceX pod competition does raise a compressor question though: These compressors and high speed motors will be very expensive to make. Will any of the university student teams have the resources to afford this? As far as I know only companies such as Boeing have ever actually built compressors like this. The only Hyperloop team that might have the resources to actually build suitable compressors is HyperloopTech and I don’t know if they want to enter Musk’s competition. The competition rules say that the competing designs will be open sourced, but HyperloopTech is not open source. It is privately funded and rather secretive about the details of their work.