Hi there, I have solved this System Extension Cache rebuilding loop error by running certain command lines in the built-in Terminal app on my Mac. Let me show you how to deal with this error in detail.
2. Run the following command lines on the Terminal app and hit the Enter/Return key.
sudo rm -rf /Library/Extensions/dfsfuse.kext
sudo kmutil clear-staging
3. Shut down your MacBook Pro.
5. Click Options and then select Continue.
6. Tap Utilities and scroll down to select Terminal.
7. Run the following command line on the Terminal:
kmutil trigger-panic-medic -- volume-root /Volumes/Macintosh \ HD
8. Make sure that the command line result indicates that the kernel extension has been removed.
9. Shut down your Mac, reboot your Mac, and check if the System Extension Cache rebuilding loop error pops you still.
Or, when you enable System Extensions in the Security > Privacy panel, it would tell you the extension had been updated and that you needed to restart, giving you the option to click 'Restart' or 'Not Now.' Whenever you select the Restart option, it would restart the loop.
You can click 'Not Now' and restart your Mac manually. After restarting, the extension was properly installed with no prompt to restart.