Hello,
 
It is resolved now (!). I tried to solve one issue but I created another one. I had a problem with "modprobe loop" under 2.6.20-1.2944.fc6 therefore
(as a part of the troubleshooting) I added below line into /etc/modprobe.conf trying to force it to load at start:
install loop /sbin/modprobe loop; /bin/true

Becuase I used the same name (loop) twice in above line, I created the loop...
 
However once I commented this line all if fine now.
 
Chuck - thank you for pointing me in the right direction.
 
I'm sorry for any confusion caused,
 
Jan
 
2007/6/1, Chuck Ebbert <cebbert@redhat.com>:
On 06/01/2007 02:58 PM, Jan Andrejkovic wrote:
> Hello,
>
> I have FC6 with default latest kernel and I configured encrypted swap
> (using
> /etc/crypttab). Now when I need to use losetup to "mount" floppy disk image
> as a loop device,
> I should have module loop loaded first.
>
> When I try "modprobe loop" modprobe hangs and starts to spawn its
> copies, and then I see more and more modprobe processes eating all my
> CPU time and swap space.
> The only thing which saves my system from crash is to cancel the
> modprobe or if I do "killall modprobe".

You need to file a bug for this. And include the contents of
/etc/modprobe.conf in the report.