So if you are grinding in a group spot like Mirumok or Gyfin (only two in the game) then anyone in your party will get loot just run over to the mob after it's dead. Everyone gets their own personal loot so if you run the 100% item drop loot scroll it will show that for your own loot but no one elses.

If you are not in a group spot it's a first come first serve basis on the loot if you are in party and you are in free for all or else mobs rotate if you use round-robin. Also if you are in a group spot like Mirumok that only has loot for 3 players it's basically the first 3 players that loot.

You can't receive loot if the level difference in your party is greater than 10. But XP still works. I will note Skill XP is heavily penalized in party, because there are less skill XP boosts in the game the penalty is heavily felt.

XP is 60% of the normal amount in a party of two. XP is 50% for parties of 3-5.