So it will execute this forever? But obviously it won't execute forever, correct? Is there a time limit within SQL Server after which long running queries will be killed? How does that work? I mean some queries will take a long time to run and some others like the one in this example are faulty and will run forever....

So, in this case the app will get a SQLTimeout error? I guess my question is what is the sequence of events internally inside SQL Server and between SQL Server and (a .NET) app that finally result in a SQLTimeout error?