Search crawl issues after installing .NET 3.5 SP1
A number of issues with crawling content in SharePoint was observed since installing .NET 3.5 SP1. The behavior, usually is the inability to crawl the content and various permission-related messages in your crawl log.
Among these the most frequent message sounds like:
Check that the Default Content Access Account has access to this
content, or add a crawl rule to crawl this content…
The reason for all these messages is actually a change in the http authentication process implemented in this service pack. As you are aware, in order to crawl content, SharePoint will attempt to log on by using the default content account, if the logon authority , specifically the Lsa will deny the logon attempt, these errors may occur.
The resolution for that is rather simple described in the following KB article http://support.microsoft.com/kb/896861 . All you need to do is to disable the loopback check
Here, for your reference the changes to NTLM authentication for http web request in version 3.5 SP 1 http://msdn.microsoft.com/en-us/library/cc982052.aspx