Update 2/1/2011 - There is now a SP2 hotfix that addresses this here: http://support.microsoft.com/kb/978021

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Consider the following scenario:

• You install the distribution point role on a Microsoft System Center Configuration Manager 2007 Service Pack 1 (SP1) site server.
• You customize the retry settings on the Distribution Point tab for the distribution point. Or, you use the default value for the retry settings.
• A retry is required after a package distribution fails.

In this scenario, the Distribution Manager does not honor the retry settings on the Distribution Point tab when the Distribution Manager retries the distribution.

Note Before each retry, there is a 10-second delay.

For information on the hotfix and associated settings needed to resolve this see the following new Knowledge Base article:

KB978875 - The Distribution Manager does not honor the "Number of retries" and "Delay before retrying (minutes)" retry settings on SCCM 2007 SP1 site servers

J.C. Hornbeck | System Center Knowledge Engineer