The thing that stands out to me in the quote you gave here is that 'being expressed [it] was the mother of all created things.' It made me think of the difference between things that are expressed, and those that are unexpressed. I can be happy, but if I don't express that happiness, it doesn't 'create' a smile. I can have an idea for a story, but until I express it, the story isn't created. Having something in your head, but not acting on it, creates nothing.
Oh, interesting bit - and very 'Dao-ish': The word 'ineffable' literally means 'incapable of being expressed' in its first definition. So, the Dao is incapable of being expressed, and when it is expressed, it creates all things. Koan?
Interesting. I hadn't thought about this quote in those terms before. I do know that the concept of dualism is brought up throughout Daoism though, so perhaps here what we're really talking about are the differences and similarities between expression and creation.
To take your example, if you are happy but don't outwardly express it, that happiness would still exist, but not in any observable way like a smile. I argue that in some sense you would have already created that happiness, but it would be a happiness that only you knew existed. The same could be said for a story, for it could be a story you had already created in detail, but also a story that wasn't expressed anywhere outside of your subjective frame of reality.
I bring this up because there have always been thoughts and beliefs that certain parts of Daoism relate very well to certain theories within quantum physics. There is the theory that whatever one perceives doesn't actually exist until one is there to perceive it. In other words, our own consciousness creates our subjective reality, but doesn't express our reality in an objective, physical way for others to see.
Getting back to the concept of the Dao, if the Dao truly is ineffable, I don't know that it must also mean that the Dao is incapable of creation. Perhaps the Dao was simply the first consciousness to create it's own subjective world just by existing, through which all other conscious beings came into existence to create their own subjective worlds. If that was the case I could see how the Dao could earn the title of "mother of all things" without ever having to outwardly express itself.
I hope I made some sense there. I tend to ramble and jump from place to place when I talk about stuff like this. I'm also not sure if I really believe in this either, but this is my best attempt at making some sense out of the rather abstract concepts in Daoism. If the quote really is a koan though, then applying logic to it as I've tried to do is kind of pointless