If you have a ground loop, that means you have more than one ground connection between devices. This causes a loop, which acts as an antenna that picks up AC line noise. When you use a ground lifted cable, you break the loop at one point, but there's still a ground connection between devices. For example, it's common to lift the ground on an effect loop return. There would still be a ground connection between the effect loop send and your effect, which is all that's needed.