When NGen did go crazy like this Microsoft Support suggested to delete the registry key
Computer\HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft \.NETFramework\v2.0.50727\NGenService\Roots
and its decendants
That fixed the issue but it remained mysterious why this was happening and what exactly did break when you delete the registry key NGen will build up its Ngen root dll cache automatically and inside the registry keys was no obvious garbage data visible and the issue remained mysterious