UVFSService randomly hanging and hogging CPU

For some bizarre reason, downloading certain Steam games on macOS to an external disk can hang UVFSService with 100% CPU and cause system instability when any app tries to interact with the same external disk.

Activity Monitor showing UVFSService is on 100% CPU

When the hang happens, the only way to fix the issue is to kill UVFSService (which will eject the external disk) and reboot the Mac.

Steam stuck on 'reserving space' for a 27MB game for an hour

Once you reboot, you must go to the Steam library folder and delete the game's appmanifest_###.acf and the downloading/ folder (easier to do if you sort by Date Modified), or else starting up Steam will hang UVFSService again.

Edit 1: This reproduces on both of my Intel and Apple Silicon machines. I still don't know the exact root cause of either macOS, Steam or the external drive itself causing issues.

Edit 2: A workaround is to install to the internal hard disk first, then move the install location to the external disk, this won't cause the hanging. It's still quite irritating that you have no idea if the new game you're about to install might trigger the bug.

Edit 3 on 2024-05-29: This garbage bug is STILL happening on macOS 14.5