Enabling causes Redirect Loop for all non-admin users on login

Which block are you using? What other modules do you have enabled?

I'd be surprised if this is a bug in formblock module, as it contains no redirects. Perhaps another module is redirecting on form_alter or an access check?

I can confirm I get this with latest stable version for one and only node form which is set to a time interval limit and is in a block in a front page. Works for admin, but for anonymous worked only once, submitted a node and since then page doesn't homepage load anymore because of unlimited redirection loop.

Not really using anything else. Had to enable jquery update 1.7 to make the forms work and running on Bootstrap theme. Also some Views on front-page. That's about it.

Pretty much fix the problem if you change Limit box value from 1 to e.g. 10, but when page loads, it spams You can't create more content of type Titles all over.

So yes, each time you reach limit it ends up in redirection loop for anonymous users.

Combining multiple modules like this could cause problems like you are experiencing. I'd recommend you consider building a custom block or module to provide the functionality you need.