Hello @Bhogaraju, Praneeth ,
Thank you for the detailed repro and for sharing the comparison logs.
Based on the documentation currently available, I could not find any Microsoft documentation that describes the performance characteristics or scaling behavior of the built-in FilesInUse detection mechanism when Restart Manager is disabled. The documentation explains what the FilesInUse mechanism does, but not how its detection algorithm is implemented or whether increased execution time with a larger number of running processes is expected behavior.
Regarding your second question, the documented setting that keeps Restart Manager detection while disabling Restart Manager's shutdown/restart mitigation is MSIRESTARTMANAGERCONTROL="DisableShutdown", or the equivalent policy setting DisableAutomaticApplicationShutdown = 2.
According to the documentation you referenced, these settings disable Restart Manager's attempts to mitigate restarts while still allowing Windows Installer to use Restart Manager to detect files in use by applications. As a result, this configuration may provide the benefits of Restart Manager-based detection without automatically shutting down or restarting applications.
As for whether the built-in FilesInUse path could be optimized or whether its cost could be formally documented, I was unable to find any public statement, documentation, or known issue that addresses this specific behavior.
Given your findings (7+ minutes with the built-in mechanism versus a few seconds with Restart Manager enabled), it would be valuable to test with MSIRESTARTMANAGERCONTROL="DisableShutdown" to determine whether it restores the faster detection path while avoiding automatic application shutdown/restart.
If you are able to test this configuration, please let me know the results. It would help determine whether this documented mode addresses your scenario. If you found my response helpful or informative, I would greatly appreciate it if you could follow this guide for your confirmation.
Thank you.