diff --git a/installer/windows/redrob-code.iss b/installer/windows/redrob-code.iss
index 96470b0b95..387f7f9bbd 100644
--- a/installer/windows/redrob-code.iss
+++ b/installer/windows/redrob-code.iss
@@ -141,6 +141,21 @@ begin
     RegWriteExpandStringValue(HKEY_CURRENT_USER, 'Environment', 'Path', Rebuilt);
 end;
 
+{ A running shared daemon is `redrob.exe serve --register` from this directory, and Windows will not
+  overwrite an exe that is running. Stop it through the installed CLI before [Files] replaces it;
+  attached apps reconnect and start the new version. Any failure (no install yet, nothing running,
+  an old binary without `service stop`) is ignored: the install proceeds either way. }
+function PrepareToInstall(var NeedsRestart: Boolean): String;
+var
+  Existing: string;
+  ResultCode: Integer;
+begin
+  Result := '';
+  Existing := ExpandConstant('{app}\redrob.exe');
+  if FileExists(Existing) then
+    Exec(Existing, 'service stop', ExpandConstant('{localappdata}'), SW_HIDE, ewWaitUntilTerminated, ResultCode);
+end;
+
 procedure CurUninstallStepChanged(CurUninstallStep: TUninstallStep);
 begin
   { usUninstall, not usPostUninstall: the value is removed while the app path is still known good. }
diff --git a/packages/redrob/src/cli/cmd/serve.ts b/packages/redrob/src/cli/cmd/serve.ts
index f4848b510d..59530a2fdd 100644
--- a/packages/redrob/src/cli/cmd/serve.ts
+++ b/packages/redrob/src/cli/cmd/serve.ts
@@ -1,3 +1,4 @@
+import os from "node:os"
 import { Effect } from "effect"
 import { effectCmd } from "../effect-cmd"
 import { withNetworkOptions, resolveNetworkOptions } from "../network"
@@ -41,6 +42,16 @@ export const ServeCommand = effectCmd({
   handler: Effect.fn("Cli.serve")(function* (args) {
     const { Server } = yield* Effect.promise(() => import("../../server/server"))
     const register = args.register === true
+    // The shared daemon outlives whoever started it. A caller that spawned it from an app's
+    // install folder (older SDKs did) would otherwise have that folder held open for the daemon's
+    // whole life, blocking the app's Windows update. Requests carry their own directory.
+    if (register) {
+      try {
+        process.chdir(os.homedir())
+      } catch {
+        /* keep the inherited cwd */
+      }
+    }
     const Registry = register ? yield* Effect.promise(() => import("../../daemon/registry")) : undefined
     // The daemon's secret is per start. It must be in the environment BEFORE the server's config
     // layer reads it, and it is what goes into the record, so other apps can authenticate.
diff --git a/packages/redrob/src/daemon/connect.ts b/packages/redrob/src/daemon/connect.ts
index 741005ca09..059a3ff377 100644
--- a/packages/redrob/src/daemon/connect.ts
+++ b/packages/redrob/src/daemon/connect.ts
@@ -9,6 +9,7 @@
  *      for the new record to answer.
  */
 import { spawn } from "node:child_process"
+import os from "node:os"
 import path from "node:path"
 import { InstallationVersion } from "@redrob-code/core/installation/version"
 import * as Registry from "./registry"
@@ -87,6 +88,9 @@ export async function connectOrStart(options: StartOptions = {}): Promise<Connec
     detached: true,
     stdio: "ignore",
     env,
+    // The daemon outlives its caller. Inheriting the caller's cwd (an app's install folder) would
+    // hold that folder open for the daemon's whole life and block the app's Windows update.
+    cwd: os.homedir(),
   })
   child.unref()
 
diff --git a/packages/sdk/js/src/daemon.ts b/packages/sdk/js/src/daemon.ts
index 60cb4c440a..908347b13f 100644
--- a/packages/sdk/js/src/daemon.ts
+++ b/packages/sdk/js/src/daemon.ts
@@ -139,6 +139,9 @@ function runServiceStart(options: DaemonOptions, bin: string): Promise<DaemonRec
   return new Promise((resolve, reject) => {
     const child = spawn(bin, ["service", "start", "--json", "--idle-exit", String(idle)], {
       env,
+      // `service start` spawns the long-lived daemon, which inherits this cwd. The app's own
+      // install folder must not be it: the daemon would hold it open and block the app's update.
+      cwd: os.homedir(),
       stdio: ["ignore", "pipe", "pipe"],
       windowsHide: true,
     })