Hi,
Do your two websites have the same physical path ?
There are some differences between the IIS6.0 and IIS7.0 Http Redirect feature. With IIS6.0, the setting via this feature is stored as a key in the Metabase. With IIS7.0, This configuration is stored in the web.config file in the section <configuration> <httpRedirect/> </configuration>.
If two websites are under the same path, they will use the same web.config file. Then you changes on one site’s Http Redirect feature will be replicated to the other website. This can be the reason of the loop. The solution should be using a different physical path for the redirection site.