Update statement on your table introduces table scan. It means, that SQL Server reads every row in your table to check if row needs to be updated. During that read operation SQL Server issues (U) update lock on the row. In case if row needs to be updated, it converts (U) lock to (X) exclusive lock and held that lock till end of transaction. (U) locks are incompatible with other (U) nor (X) locks.
In your case you have 2 sessions waiting for each other. Each session puts X lock on (different) rows and tries to issue (U) lock and read the row updated by other session (with (X) lock held). It's a bit more complicated actually - you have more than 2 sessions involved but I hope you get an idea.
Create an index on iPHMD_InterestList_ID to avoid table scans during update