I was recently trying to update KMPlayer 64X while display fusion was running. The installer threw an error stating that C:\\Programs\KMPlayer 64X\VSFilter.dll could not be updated.

I then downloaded one of many file-lock managers and determined that DisplayFusion.exe had a lock over the file. Once I kill it, the installation continued without any issues.

What's going on here?

I just had the same problem. Had to use Process Explorer to find out which program was using KMPlayer's VSFilter.dll and it was DisplayFusion.