First, there is a newer version of UltraEdit Compare Prof. available then hotfix 3 for v5.00. The currently latest full install package contains v5.00a.

UC_ShellExt.dll is the shell extension DLL for the Windows Explorer (= Windows GUI - Graphical User Interface). When you first time press right mouse button, the DLL is loaded and then cannot be deleted or overwritten as long as the Windows Explorer is running. And the Windows Explorer is running as long as you can see the shortcuts on your desktop and the Windows taskbar. All Explorer shell extension DLLs are handled in this way.

So the update can be done normally only when Windows GUI is not running, for example during Windows start. That's one reason why many programs and the Windows security updates often require a restart of Windows. There are several special programs which can unload DLLs or register a file for being deleted or replaced by a newer version on Windows start. By these tools are something for experts.

I explain here the method you can use without special knowledge.

1. Start UltraCompare and click in menu Options on Integrate with Explorer. UltraCompare deletes now the registry entries for the Explorer shell integration. But the DLL is still loaded.
2. So next restart your Windows completely. Logoff/logon is not enough. After restart the DLL is not loaded anymore by Windows Explorer because of the missing registry entries which has told the Explorer that there is a shell extension.
3. Now you can replace the existing shell extension with the newer one. I suggest to make before a backup of the DLL.
4. Start UltraCompare and click again on Integrate with Explorer in menu Options. Then UltraCompare registers the shell extension DLL again and you can make immediately use of it without restarting Windows.

If in your UltraCompare directory is a file named UC_ShellExt.dll.tmp you can delete this file. It is a backup or remaining file of a previous update.