Although I have disabled the loopback check on other SharePoint farms, in this case I forgot to do it.

The problem surfaced in the User Profile Application that worked perfectly fine until I added a picture to my profile and tried to perform a sync.

The FIM logs were showing stopped-extension-dll-exception on the MOSS_DELTAIMPORT
If I removed the picture and performed a re-sync, the sync worked successfully.

Checking the Event Logs I had the Event 6801, FIMSynchronizationService with a 401 Unauthorized error:

 "System.Net.WebException: The remote server returned an error: (401) Unauthorized.
   at System.Net.WebClient.DownloadDataInternal(Uri address, WebRequest& request)
   at System.Net.WebClient.DownloadData(Uri address)
   at Microsoft.Office.Server.UserProfiles.ManagementAgent.ProfileImportExportExtension.Download
Pictures(ProfileChangeData[] profiles)
   at Microsoft.Office.Server.UserProfiles.ManagementAgent.ProfileImportExportExtension.Microso
ft.MetadirectoryServices.IMAExtensibleFileImport.GenerateImportFile(String fileName, String conn
ectTo, String user, String password, ConfigParameterCollection configParameters, Boolean fFullIm
port, TypeDescriptionCollection types, String& customData)
Forefront Identity Manager 4.0.2450.51"

Most blog posts I found regarding a UPA picture error with stopped-extension-dll-exception in FIM had to do with some incorrect PictureURL, mine was fine, and I could browse to it (from a client machine)

If I had tried to browse to it from the server I would have also got the Access Denied with 3 credential prompts.

To fix, disable the Windows Server Loopback check on your Site Collections.

1. 1. In regedit, find the registry key: HKEY_LOCAL_MACHINESYSTEMCurrentControlSetControlLsaMSV1_0
   2. Create a new Multi-String Value named ‘BackConnectionHostNames’

1. 1. Add you MySite URL

1. Perform an IISReset