Hi anilhr
It sounds like you have a combinatorial loop from one of the inputs, through the testbench, to the outputs, and back through the interface to the inputs again.
Is it easy to examine each of the input to output paths to identify those which are purely combinatorial? It sounds like one of the paths will be toggling between values in zero simulation time, causing an infinite loop.
For tricky loop problems I often use simulator performance profiling to identify which areas of code are being exercised repeatedly, and for one at time 0 you should also be able to single step through the code and see where it is looping.
But a quick analysis of the paths may prove quicker for you if the problem is a simple one to identify.
Richard