DN bit not set

Hi,
Yes, you are right, from the RFC4577 section 4.2.5.1, when a type 3 LSA is sent from a PE router to a CE router, the DN bit in the LSA Options field MUST be set.
From your description, you imported the route loopback on the PE2, I am not sure what you mean import.
Scenario 1, you import or network the loopback interface which belongs to PE2, then, the route doesn’t belongs to the VPN, it’s just a normal route, so the DN wouldn’t be set.
Scenario 2, the loopback network belongs to the VPN, and you import it from BGP to the OSPF, then, the DN must be set.
Kindly check if you are in scenario 1, if not, kindly upload the eNSP project or the corresponding configuration.
Thanks.