When we try and add entries into the "Blocked Senders" list we get the "maximum number of entries has been exceeded" error.
Can this limit be raised?
At a high level you cannot increase the limit. I would recommend that if you are referring to using "Local Bad Sender Domains" that mechanism is not a reliable way to configure against spam, addresses and domains can generally be spoofed. Blocking by IP allows for ranges, so it is more useful, but other tools like Customer Specific Spam should be used over Local Bad Sender Domains.. and Local Bad Sender Domains should be cleaned up occasionally, cause it's a pretty good bet that there's a lot of content in there that is no longer useful (spammers change addresses extremely often).