Windows File Level Restore hangs on "Starting restore session"

Windows File Level Restore hangs on "Starting restore session" for abnormally long period of time while free disk space on drive C:\ keeps decreasing dramatically on the machine where the Veeam Backup & Replication Console is launched.

You may that find the following location of the cache file constantly growing:

C:\Windows\system32\config\systemprofile\AppData\Local\mount_cache{GUID}

or

C:\Windows\SysWOW64\config\systemprofile\AppData\Local\mount_cache{GUID}.
 

The issue occurs when guest Windows has Transactional NTFS (TxF) turned on. When mounting to Veeam server it can cause NTFS driver to enter infinite loop trying to re-apply transaction log.

To resolve:

1. Login to the guest OS of the machine being backed up as administrator.
2. Open an Administrative Command Prompt
3. Execute 2 following commands for each logical disk in VM.
   Example for disk C:
   • fsutil resource setautoreset true C:\
   • fsutil resource setavailable C:\
4. Run the backup job to create a new restore point.
   Note: This will correct the issue for all future restore points, and is not retroactive.
5. Test the Windows File Level Restore again

For more information about Transactional NTFS (TxF)

https://docs.microsoft.com/en-us/windows/win32/fileio/transactional-ntfs-portal