While I can't offer any comment on your specific issue I can say we moved to SF 1.6.5 and DX 7.3.8 last weekend without any issues and it has worked ok since.
Cheers, Peter
This is something that we do everyday. I think that you have something else going on within your custom application code that is causing the infinite loop. If you can create a sample that reproduces your behavior, then I will look at it and tell you where the problem is.