I agree. I'm having the same problem. I recently bought a new retina display mbp. Seems like all i have been doing since i got it is troubleshooting and debugging. This is just the latest thing. I thought that apple stuff "just worked" but it doesn't seem that way anymore, i guess. I am so very frustrated and disappointed.
Seems as though Mountain Lion is the common issue in the end. I feel as though Steve Jobs is rolling over in his grave with all of these compatability/bug issues in Lion and Mountain Lion. ***** a@@.
Anyway, I just had four songs from an "unknown CD" that it wouldn't upload. I also just got the infinite loop either on step 2 or step 3. I have contacted support by phone, who had me contact iTunes support by email, who finally got back to me saying they really didn't know and referred me to a couple of general Troubleshooting articles here on the support pages. Wow.
So I am back at the community board, which is the only place I seem to be getting any real help.
At this point, the only way I could get iMatch to finish is to delete the files that won't upload.
BTW, according to the Troubleshooting docs, MP3 and AAC encoding should work fine even if the song isn't recognized in iTunes match. It will just upload the file "as is"...(or its supposed to...and that's why we're here).
The only limiting factor is the file size...song file cannot be over 200MB...which is fricking huge for an audio file. Mine were like 4.5MB each.
Again, this seems to be a ML / iMatch conflict.
Get your sh@t together, Apple!!!