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One thing i never understood nor find any easy explanation is how Windows manages changes to system files from differing Windows updates. Take for example

A certain KB release applies patches to A.dll and B.dll, which I may not apply.

A later KB release patches up A.dll only. Which I apply. A.dll should not be carrying the fix in the earlier KB.

When I do choose to apply the former KB fix, what version does A.dll really become? It would seem that Windows Update cannot merely replace files wholesale, but have to intelligently patch the files based on past KBs' hotfixes applied. Correct me if I'm wrong, thanks.

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Not quite an answer, but you can enable verbose logging of windows update. IIRC, It shows dependencies resolution. Instructions at bottom of this KB Article 902093 – motobói Feb 9 '12 at 13:34

In the case you gave, it will either hold two patches to A.dll (one for those who have patched B.dll and one for those who have not) or, more commonly, it will carry the patch to B.dll as well.

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Sometimes you will not be offered the 2nd update until the first is fulfilled as well. How many times have you installed every update on an old system, just to find 20 more waiting after a reboot? – Mark Henderson Feb 8 '12 at 8:08
But what content do the KB hotfixes hold within? I cannot think it is possibly a full copy of A.dll, since the patches are mutually exclusive and that would mean overwriting a patch over another depending on the sequence order of update. – icelava Feb 9 '12 at 4:14
The hotfix confirms the versions before it updates and has logic to update from various previous versions. A hotfix installation will never unintentionally downgrade a file. – David Schwartz Feb 9 '12 at 4:28
So it means a hotfix has a chain of dependencies (past hotfixes) that must be satisfied before the current one can go in. You cannot apply hotfix C until you apply A and B. The matter may even be further complicated if you obtain a QFE patch that is not part of regular Windows update releases. – icelava Feb 9 '12 at 8:21

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