The Magpies took the lead through Elliott Bennett but the Tye hit back through Callum Hart, Jonathan Gbla and Gus Burton to consign Walsh’s side to a fourth consecutive defeat.
Loxwood remain in 16th and stay six points clear of the drop.
Walsh said: “We started off really well but unfortunately things didn’t go for us.
“Our striker got injured and had to come off on a stretcher. It disrupted the flow of the game-plan.
“They went 2-1 up on the stroke of half-time and that changed the team-talk.
“We threw everything at them but some good saves from Alieu (Secka) meant we couldn’t find the equaliser.
“We know what we’re capable of and we set our own standards but the first-half wasn’t good enough.
“After the second-half we did improve and on another day we go on and win the game but it wasn’t to be.”
SEE ALSO Sussex football hotshots: Who are the county's top scorers this season? | Loxwood boss Walsh: 'There's no panic at the moment but we have had a few honest chats' | Blunt Loxwood 'had enough chances' to pick up points in loss to relegation rivals Eastbourne UnitedThe Magpies opened the scoring on ten minutes after a solo run from Bennett saw him slot past Secka.
Peacehaven levelled after a 20-yard strike from Hart before Tim Bennett had to be taken off on a stretcher.
The visitor’s Marcus Allen also had to leave the field after a collision with keeper Liam Matthews from a set-piece.
These unfortunate incidents saw a hefty amount of stoppage time added to the first period.
In the seventh minute of added time, Gbla rose highest from a corner to bullet his header home and give the visitors the lead.
The second-half saw Peacehaven control proceedings but Loxwood should have found the equaliser on 75 minutes.
A Magpies forward found himself one-on-one with Secka but the stopper smothered the shot.
The visitors did find the third goal at the death as Burton tucked home from a difficult angle.
Loxwood host 18th-placed Little Common in a battle at the bottom on Saturday.
Loxwood: Matthews, Follea, Courtney, French, Boiling, Cowan, E Bennett, Robinson, T Bennett, Goldson, Karl. Subs: Hooper-Ridsdale, Popham, Ogunrinde, Frankland.