I know very little about it, but Gallifreyans (at least the posh ones who come from certain "houses" - like our posh families and such, I don't think the normal ones do) aren't made by teh uber-l33t s3x0r or anything, they're made on the "loom". I know very little other then this. But theres some ponderings over it because according to the boi the Doctor actually has a bellybutton (which he wouldn't have if he was loomborn, 'cause theres no cord)
Its confusing. I'm just going by what I've picked up from reading the novels and stuff.
xx