If you also have some number of low grades to be dropped, this is the same issue that I have just tracked down (which is fixed in the new 2.3.3 version). The combination of an extra credit item and droplow greater than zero hits the bug which causes an infinite loop. If you want to patch it yourself, here is the change needed:
In lib/grade/grade_category.php, move the line containing only:
which occurs at line number 932 in version 2.3.2+
up to line 915 right after the line:
$possibleitemid = $grade_keys[$originalindex+$i];
This keeps it from going into an infinite loop if the extra credit if statement is true.
I hope this helps.
P.S. I didn't make the fix in 2.3.3, I just saw that it was in there after I tracked it down on my system.