Trying to give something back to the Community...
It seems there is an issue in ConfigMgr SP2 with Distribution Manager ignoring the "Number of retries" and "Delay before retrying" settings ONLY if it encounters a problem (i.e. a DP is down or there are permission problems).
Microsoft have confirmed and are aware of the problem and a KB article is on the way they informed us in the MVP call yesterday (the number when it is released (no ETA but hopefully soon) will be 978021).
If you have this issue right now and need the hotfix then please contact CSS who can help you.
You can find a write-up on the issue on my fellow MVP Torsten Meringer’s blog at:
Read the complete post at http://wmug.co.uk/blogs/cliffs_blog/archive/2009/12/17/configmgr-new-kb-article-on-the-way-for-distribution-manager-issue-in-configmgr-2007-sp2.aspx