I recently encounter this issue on my client wordpress mu blog. When i open main blog page after installation an infinite loop occur and stop at dead end in Firefox. I searched a lot about this on wordpress forum. Surprising, issue is stated everywhere in the forums and blog but no solution was suggested.
Why Redirect Loop?
The issue arise because database was not created during wordpress installation but word press config file was written. WordPress uses wp-config.php file to store database configuration. If WordPress find this file in the installation directory then no further installation procedure begin. WordPress now look at DB to load default blog but there is no table in the database. Again, control goes to install procedure but WordPress understand blog already installed because WordPress config file is present in root folder. Once again WordPress try to load blog from database and redirect loop occur. I hope WordPress guys will fix this in future releases.
The fix is very simple. Simply, rename or delete WordPress config file and re-install wordpress mu. Make sure database user you are using during installation have sufficient permission to create and manipulate database tables.