When deleting a file in a Citrix Application Isolation Environment the behaviour is not as expected. After deleting the file a zero byte file is created.

This seems to be a function of the logic of the AIE file isolation mechanism. It would appear the Citrix AIE uses user-defined NTFS attributes such as CITRIX_DELETED_FILE_MARKER. The logic works in the following way:

If (file exists in the isolated environment) Then 
    If (Size = 0) AND (CITRIX_DELETED_FILE_MARKER) Then
        Return (NOT_FOUND)
    Else 
        Return (Isolation File Handle)
    End If
Else
    If (Open file for read) Then
        Return (Original File Handle)
    Else
        Copy (Original File, Isolation File)
        Return (Isolation File Handle)
    End If
End If

FileMon Trace:

DELETE C:\Application\File.txt SUCCESS		
CLOSE C:\Application\File.txt SUCCESS		
OPEN C:\Documents and Settings\citrixuser\Application Data\Citrix\AIE\Application\Device\C\Application\File.txt SUCCESS Options: OpenIf Access: 00100102	
SET INFORMATION C:\Documents and Settings\citrixuser\Application Data\Citrix\AIE\Application\Device\C\Application\File.txt SUCCESS Length: 0
CREATE C:\Documents and Settings\citrixuser\Application Data\Citrix\AIE\Application\Device\C\Application\File.txt:CITRIX_DELETED_FILE_MARKER SUCCESS Options: OverwriteIf Access: 00100002