Linux ignores source route option in default configuration.
You have to undefine CONFIG_IP_NOSR kernel option to activate loose
source routing.
Configure.help in Linux source directory explains this.
IP: Drop source routed frames
CONFIG_IP_NOSR
Usually, the originator of an IP frame (= packet) specifies only the
destination, and the hosts along the way do the routing, i.e. they
decide how to forward the frame. However, there is a feature of the
IP protocol that allows to specify the full route for a given frame
already at its origin. A frame with such a fully specified route is
called "source routed". The question now is whether we should
honour these route requests when such frames arrive, or if we should
drop all those frames instead. Honouring them can introduce
security problems (and is rarely a useful feature), and hence it is
recommended that you say Y here unless you really know what you're
doing.
-- from /usr/src/linux-2.0.34/Documentation/Configure.help
-- Kenichi Ishikawa