This problem cleared up for me once I stopped rerouting incoming SMTP mail through the Internet Mail Service.
This happened when I applied service pack 4 to 5.5 running service park 3. I had to change the file version in IMS to correct it and I haven't been able to correct the problem in the MS Mail Connector.
This behavior occurs because Internet Mail Service is connecting to itself in an attempt to deliver the message. See ME260247
for more information.
See the links below for suggestions on how to troubleshoot this event. Also, suggested on a newsgroup post: "Turn on the SMTP Protocol Log category of Diagnostics Logging on the IMS. Set the level to "Maximum". Stop and restart the IMS. Wait for the 4115 to show up, then stop the IMS, turn off the SMTP Protocol Log. Now have a look through the log files for the "too many hops" line and work UP the file until you see the RCPT TO header. That'll tell you where the message was going. From there it should be easy to figure out what's happening."