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wpcap is not compatible with wireshark.

What is "wpcap"? If it's WinPcap, it is compatible with Wireshark, as is Npcap.

I understand that NPCAP is needed to fix the compatibility issue.

There is no such compatibility issue.

WinPcap may have some issues with newer versions of Windows (such as Windows 10), and Npcap should address those issues.

I noticed that when i run the NPCAP installer it will search for wpcap DLL in "c/System32/wpcap.dll" which is not there. it's actually in syswow64 folder (also packet DLL which looks related).

The Npcap installer has an option for "WinPcap Compatible Mode". The Npcap home page says:

• WinPcap compatibility: For applications that don't yet make use of Npcap's advanced features, Npcap can be installed in “WinPcap Compatible Mode.” This will replace any existing WinPcap installation. If compatibility mode is not selected, Npcap can coexist alongside WinPcap; applications which only know about WinPcap will continue using that, while other applications can choose to use the newer and faster Npcap driver instead.

That option is not necessary for Wireshark; Wireshark will work OK with WinPcap (assuming WinPcap itself works on your version of Windows), Npcap installed in WinPcap compatible mode, or Npcap installed not in WinPcap compatible mode.

If not installed in WinPcap compatible mode, the libraries are installed in C:\Windows\System32\Npcap. There's wpcap.dll, which is the DLL that implements the Npcap API (libpcap API, with UN*X-specific APIs removed, Windows-specific APIs added, and some additional APIs), and packet.dll, which is used by wpcap.dll to communicate with the NPF driver that Npcap installs to do packet capture.

On a 64-bit version of Windows, the installer also installs libraries in C:\Windows\SysWOW64\Npcap, for the benefit of 32-bit programs.

I suggest you uninstall WinPcap and Npcap from Control Panel, if it reports either of them, and then remove any Npcap directories in C:\WIndows\System32 and C:\Windows\SysWOW64. Then download the latest version of Npcap and install it.