VSCode updates fail with "Failed to create file handle" on Code.exe

[jcotton42]

• VSCode Version:
  Version: 1.28.0 (user setup)
  Commit: 431ef9d
  Date: 2018-10-05T14:58:53.203Z
  Electron: 2.0.9
  Chrome: 61.0.3163.100
  Node.js: 8.9.3
  V8: 6.1.534.41
  Architecture: x64
• OS Version: Windows 10 1803 (build 17134.345) 64-bit

Steps to Reproduce:

1. Install VSCode update when available
2. Observe that update fails

Does this issue occur when all extensions are disabled?: N/A as Code is closed during updates

When installing an update the updater will sit on the intermediate progress bar for several minutes, then shows the following error message

---------------------------
VS Code
---------------------------
There was an error while opening file handle: "C:\\Users\\Joshua\\AppData\\Local\\Programs\\Microsoft VS Code\\Code.exe":

Failed to create file handle: The process cannot access the file because it is being used by another process.



Please verify there are no VS Code processes still executing.
---------------------------
Retry   Cancel   
---------------------------

Check file handles with a tool like Process Hacker 2 (Process Explorer should also work) shows that the handle is open by System, closing it is impossible. The machine must be restarted and the full setup must be rerun without opening Code beforehand. Disabling AV (Defender in this case) makes no difference.

Antivirus information: Windows Defender
Antimalware Client Version: 4.18.1809.2
Engine Version: 1.1.15300.6
Antivirus Version: 1.277.1010.0
Antispyware Version: 1.277.1010.0

[vscodebot]

(Experimental duplicate detection)
Thanks for submitting this issue. Please also check if it is already covered by an existing one, like:

• Per-user background update fails on a RDP server (#60625)

[jcotton42]

Issue #60625 isn't a duplicate of this one. I tried setting "update.enableWindowsBackgroundUpdates": false but that didn't help either.

[joaomoreno]

/duplicate #47841