I don't think the problem is an unclosed handle. There's something in that directory while DNI is terminating, possibly a running setup or something like that. Retrying seems optimistic, you should be able to resolve this fully, just track down what that something is?

It seems that this is caused by Windows Defender.
It only happens once in a while, until I disable Windows Defender in Windows 10 Pro Preview x86, and then I don't get this error message.
Windows Defender is enabled by default in Windows 10.
For reference, this is how to permanently disable Windows Defender in Windows 10: http://www.tenforums.com/antivirus-firewalls-system-security/5879-permanently-disable-windows-defender.html#post234396.

I'm sure it could happen with other anti-virus solutions.
Here is a thread from a different project reporting a similar issue caused by ESET Anti-Virus for example: isaacs/rimraf#25 (comment)

In order to try and troubleshoot the issue, I tried to enumerate and find all open handles on the directory and get the name of the process by using and slightly modifying the code from here:
http://www.codeguru.com/cpp/w-p/system/processesmodules/article.php/c2827/Examine-Information-on-Windows-NT-System-Level-Primitives.htm
But it wasn't able to find any open handles for that directory.

I can't seem to enable verbose logging in Windows Defender to see if it outputs any information about scanning the directory around the time we are trying to delete it.

Any ideas?

Should I just reapply the retry logic, or is there a better solution?

For example, should the retry logic behavior and its parameters be exposed as optional attributes in the dotNetInstaller xml configuration file?
For example, retry_delete_directory="false" retry_delete_directory_maximum_retries="10" retry_delete_directory_wait_between_retries="100'

Or maybe the message box that is displayed should have Retry and Continue buttons?

Thank you.

I would be down for a feature that retries a maximum amount of times with settings. I would hard-code a second wait time or something instead of giving people the opportunity to put endlessly long times in there.