Quote - Is hair loaded from the hair folder a prop?

Yes.

Quote - Could the hair be named different than what the magnets expect, so that's why they have no affect?

This a possiblity.
Another is that the hair has Bend turned off, which stops magnets from having an affect.

If your using one of Netherworks Studio's conversion kits, there is usually one set of magents for Prop hair and another for Figure hair (and different processes for using them).
Sorry I can't be more specific, but I don't have that hair, or the M4 kit.