Lua's sandbox should be able to prevent scripts from crashing or corrupting the system, but I'd be surprised if it could prevent a script from running indefinitely. In particular, limiting the number of Lua bytecode instructions is insufficient - even a single call to `string.find` can lock up the CPU [0].
> They are using the standard Lua, rather than the LuaJIT fork, Neto said, in answer to another question.
Using LuaJIT would make sandboxing significantly more difficult, because it's much more complex than regular Lua and hence more likely to have exploitable bugs. This is the reason that game consoles disallow JIT-compilation - and hence games tend to use regular Lua rather than LuaJIT.