If you’ve been using App-V and it’s cool Dynamic Suite Composition (DSC) feature; surely you’re already aware of the power and flexibility this provides by allowing you to combine multiple virtualized applications into a single virtual package by creating dependencies between the applications themselves. This is what called a circular dependency, and if you try something like this within the Dynamic Suite Composition Tool you’ll get an error that looks something like this:
So why is this a problem?  It’s a problem because dependencies aren’t transitive (at least, not in the current release), and while a circular dependency will seem to work there are more subtle problems with this.

Full Article: App-V Blog