Question: I have two SharePoint List and each of them have a workflow.  

Both list's workflow have the option 'start this workflow when a new item is created' ticked.   

Workflow in the 1st list may move item to 2nd list if it fulfill certain requirements. Same goes to 2nd list (Workflow in the 2nd list may also move item to 1st list if it fulfill certain requirements)

May I know if there could be a scenario whereby item are looping between two list? (In another way, is a item that is moved from another list consider a new item?)

Answer: 
We've run into a couple of problems with the User Profiles after SP1 and June CU. While they may not be exactly the problem you are encountering, they are something to check to ensure there are no problems from these as well.

1st: FIM's configuration file is changed to use .net 4.0. This doesn't work, details are in this article [by Todd Carter](http://todd-carter.com/post/2011/07/01/The-User-Profile-Service-Heats-up-With-a-June-CU-Regression.aspx).

2nd: User Profile photos can only be updated by the user themselves -- NOT User profile Admins. Details in this article [by Trevor Seward](http://sharepoint.nauplius.net/2011/07/user-profile-administrators-can-no.html).

I hope one (or both) of those articles will save you from the late nights my co-worker went thru before finding them.
This is most likely due to a change in the service accounts. Is it possible that there was a manual change to the service accounts through IIS Manager that was reset to the configured account when the configuration manager was run after the service pack installation?

Please refer to [Spencer Harbar's User Profile Sync Guide](http://www.harbar.net/articles/sp2010ups.aspx) for the proper service account roles and permissions if you haven't already.