Moolim is just a creative romanisation of murim (무림).
It is the Korean language equivalent of the Chinese term 武林 (Wulin, Mulam) which refers to the society of martial artists that is the setting of the Wuxia genre. Sometimes it is also referred to as 江湖 (Jianghu, Gungwu).
As to whether or not it is in China, it is. Even in Korean-original Wuxia (i.e. not translated Jin Yong novels), the Wulin is usually located in a fictional Tang, Song, or Ming Dynasty China.
See: Mount Hua Reincarnation, Peerless Dad etc. for examples of it being in China