This isn't a part of the original AustPost code.
I'm suspecting that the looping is due to where or how the code above has been inserted and/or is exiting from.
I see nothing amiss with those settings, but IF the problem DID start after you made a change to these settings then setting them back to how they were before the change should fix the problem. It least that will give a bit more of a clue as to the cause of the issue.
Unlike the previous error message, this one is a part of the original AustPost module. I suspect that it is related to the looping problem in as much as there are two 'errors' and the module either doesn't know what to do with the first one, or that the first one is exiting the module in an abnormal fashion, or is somehow affecting the way that the second error is being handled thus causing the looping behavior.
Cheers
Rod.
ps. Please consider upgrading to the 'ozpost' module
http://www.zen-cart.com/index.php?main_page=product_contrib_info&cPath=40_51&products_id=1286 because "Austpost Improved" is outdated, will not have any more bugfixes applied, and some of the quotes it provides are already outdated due to Australia Posts rate increases not long ago.
pss. The the 'ozpost' module can be installed concurrently with the 'AustPost Improved module so you don't need to uninstall your existing module before installing the new one. This way you won't have any downtime during the upgrade processes.