This may be due to the user account under which the Updater tool runs. For instance if you are using the "Install support service" option, then the Updater will run under "System" account and thus the updates setup installation is performed (inherited from the parent Updater process) under System account.
Thus your application will be launched under System account, and this is a special account that does not support any application running with UI (it cannot display UI). Therefore your application process could end up hanging when launched under System account. As a quick check you could open the Task Manager and check for your application process if it is running and hanging.
If this is not the case, could you please send us all the resources (project files and their built - old and new - setup packages) we need to replicate the behavior through a download link by email to support at advancedinstaller dot com? And a short test case we should follow to observe the related issue.
If you cannot share with us your project files, then you can try to isolate the behavior in a buildable sample (.aip + its referenced files) which we can build and test on our side.
I am afraid I have no clue why your application process suddenly closes. To get the root cause of this behavior I recommend you to try debug your application code on a test machine where this behavior replicates.
Could you send by email to support at advancedinstaller dot com a download link for you old and new setup project, for the updates configuration project and for the old and new built setup packages so we can fully test this on our side? Also, please iterate a small test we should follow to replicate the behavior. We will try to further investigate and analyze this.