diff --git a/eng/pipelines/templates/jobs/ci.tests.yml b/eng/pipelines/templates/jobs/ci.tests.yml
index 71becd2098ba..de331e5d5f83 100644
--- a/eng/pipelines/templates/jobs/ci.tests.yml
+++ b/eng/pipelines/templates/jobs/ci.tests.yml
@@ -171,6 +171,7 @@ jobs:
           /p:EnableSourceLink=false
           /p:ProjectListOverrideFile=$(ProjectListOverrideFile)
           /p:EnableOverrideExclusions=true
+          /p:RemoveTrack1Projects=true
           $(AdditionalTestArguments)
           $(DiagnosticArguments)
         displayName: "Build & Test ($(TestTargetFramework))"
diff --git a/eng/pipelines/templates/jobs/ci.yml b/eng/pipelines/templates/jobs/ci.yml
index 7ba62787a2c5..4b6f2f88e552 100644
--- a/eng/pipelines/templates/jobs/ci.yml
+++ b/eng/pipelines/templates/jobs/ci.yml
@@ -137,6 +137,9 @@ jobs:
               /p:ArtifactsPackagesDir=$(Build.ArtifactStagingDirectory) `
               /p:ServiceDirectory=* `
               /p:ProjectListOverrideFile=$(ProjectListOverrideFile) `
+              /p:IncludePerf=false `
+              /p:IncludeStress=false `
+              /p:EnableOverrideExclusions=true `
               $(DiagnosticArguments)
           displayName: "Build and Package for PR"
       - ${{ else }}:
diff --git a/eng/scripts/Language-Settings.ps1 b/eng/scripts/Language-Settings.ps1
index 90e103d599ab..d2e16ff54924 100644
--- a/eng/scripts/Language-Settings.ps1
+++ b/eng/scripts/Language-Settings.ps1
@@ -148,7 +148,6 @@ function Get-dotnet-AdditionalValidationPackagesFromPackageSet {
   )
   $additionalValidationPackages = @()
   $uniqueResultSet = @()
-
   function isOther($fileName) {
     $startsWithPrefixes = @(".config", ".devcontainer", ".github", ".vscode", "common", "doc", "eng", "samples")
 
@@ -162,23 +161,42 @@ function Get-dotnet-AdditionalValidationPackagesFromPackageSet {
     return $startsWith
   }
 
-    # this section will identify the list of packages that we should treat as
-  # "directly" changed for a given service level change. While that doesn't
-  # directly change a package within the service, I do believe we should directly include all
-  # packages WITHIN that service. This is because the service level file changes are likely to
-  # have an impact on the packages within that service.
+  # ensure we observe deleted files too
+  $targetedFiles = @($diffObj.ChangedFiles + $diffObj.DeletedFiles)
+
+  # The targetedFiles needs to filter out anything in the ExcludePaths
+  # otherwise it'll end up processing things below that it shouldn't be.
+  foreach ($excludePath in $diffObj.ExcludePaths) {
+    $targetedFiles = $targetedFiles | Where-Object { -not $_.StartsWith($excludePath) }
+  }
+
+  # this section will identify
+  #  - any service-level changes
+  #  - any shared package changes that should be treated as a service-level change. EG changes to Azure.Storage.Shared.
+  # and add all packages within that service to the validation set. these will be treated as "directly" changed packages.
   $changedServices = @()
-  if ($diffObj.ChangedFiles) {
-    foreach($file in $diffObj.ChangedFiles) {
+  if ($targetedFiles) {
+    foreach($file in $targetedFiles) {
       $pathComponents = $file -split "/"
-      # handle changes only in sdk/<service>/<file>/<extension>
+      # handle changes only in sdk/<service>/<file>.<extension>
       if ($pathComponents.Length -eq 3 -and $pathComponents[0] -eq "sdk") {
-        $changedServices += $pathComponents[1]
+        if (-not $changedServices.Contains($pathComponents[1])) {
+          $changedServices += $pathComponents[1]
+        }
       }
 
       # handle any changes under sdk/<file>.<extension>
       if ($pathComponents.Length -eq 2 -and $pathComponents[0] -eq "sdk") {
-        $changedServices += "template"
+        if (-not $changedServices.Contains("template")) {
+          $changedServices += "template"
+        }
+      }
+
+      # changes to a Azure.*.Shared within a service directory should include all packages within that service directory
+      if ($file.Replace('\', '/') -match ".*sdk/.*/.*\.Shared/.*") {
+        if (-not $changedServices.Contains($pathComponents[1])) {
+          $changedServices += $pathComponents[1]
+        }
       }
     }
     foreach ($changedService in $changedServices) {
@@ -195,9 +213,10 @@ function Get-dotnet-AdditionalValidationPackagesFromPackageSet {
     }
   }
 
+  # handle any changes to files that are not within a package directory
   $othersChanged = @()
-  if ($diffObj.ChangedFiles) {
-    $othersChanged = $diffObj.ChangedFiles | Where-Object { isOther($_) }
+  if ($targetedFiles) {
+    $othersChanged = $targetedFiles | Where-Object { isOther($_) }
   }
 
   if ($othersChanged) {
@@ -208,6 +227,8 @@ function Get-dotnet-AdditionalValidationPackagesFromPackageSet {
     $additionalValidationPackages += $additionalPackages
   }
 
+  # walk the packages added purely for validation, if they haven't been added yet, add them
+  # these packages aren't considered "directly" changed, so we will set IncludedForValidation to true for them
   foreach ($pkg in $additionalValidationPackages) {
     if ($uniqueResultSet -notcontains $pkg -and $LocatedPackages -notcontains $pkg) {
       $pkg.IncludedForValidation = $true
diff --git a/eng/service.proj b/eng/service.proj
index 0d266722157b..a99888cb2cbb 100644
--- a/eng/service.proj
+++ b/eng/service.proj
@@ -61,10 +61,13 @@
   <Import Project="..\sdk\$(ServiceDirectory)\*.projects" />
   <Import Project="$(RepoRoot)$(ProjectListOverrideFile)" Condition="'$(ProjectListOverrideFile)' != '' " />
 
-  <ItemGroup Condition="'$(ProjectListOverrideFile)' != '' and '$(EnableOverrideExclusions)' != ''">
+  <ItemGroup Condition="'$(ProjectListOverrideFile)' != '' and '$(RemoveTrack1Projects)' == 'true'">
     <!-- Remove all track1 SDKs from Regen -->
     <Track1ProjectsToRemove Include="$(MSBuildThisFileDirectory)..\sdk\*\Microsoft.*.Management.*\**\*.csproj;$(MSBuildThisFileDirectory)..\sdk\*mgmt*\**\*.csproj;$(MSBuildThisFileDirectory)..\sdk\*\Microsoft.Azure.*\**\*.csproj" />
     <ProjectReference Remove="@(Track1ProjectsToRemove)" />
+  </ItemGroup>
+
+  <ItemGroup Condition="'$(ProjectListOverrideFile)' != '' and '$(EnableOverrideExclusions)' != ''">
     <TestProjects Include="..\sdk\$(ServiceDirectory)\$(Project)\tests\**\*.csproj" Exclude="@(MgmtExcludePaths)" />
     <SamplesProjects Include="..\sdk\$(ServiceDirectory)\$(Project)\samples\**\*.csproj;..\sdk\$(ServiceDirectory)\samples\**\*.csproj" Exclude="@(MgmtExcludePaths)" />
     <PerfProjects Include="..\sdk\$(ServiceDirectory)\$(Project)\perf\**\*.csproj" Exclude="@(MgmtExcludePaths)" />