I have multiple sites that have common product images and also their own custom ones (with same names). I want to have a folder for each site that has these contents merged but obviously don't want copies of the common images and if a new images is added to the custom folder that has the same filename as a file in the common folder it breaks the link not update the common folder. The common folder is also often updated.
eg:
\CommonImages
\ImagesSiteA
\ImagesSiteB
I'm not sure what type of file link scenario to use?
NTFS file system Server 2012
It's going to be a resource management problem to keep things sync'd, and you're going to need some kind of tooling to help. Hard links will help, but there are certain difficulties you're going to have to overcome. For example, a possible scenario:
\CommonImages
a.png
b.png
c.png
\ImagesSiteA
a.png --> hard link to \CommonImages\a.png
b.png --> an image unique to this site
c.png --> hard link to \CommonImages\c.png
\ImagesSiteB
a.png --> an image unique to this site
b.png --> hard link to \CommonImages\b.png
c.png --> hard link to \CommonImages\c.png
The problem comes in when the art department updates common images. It's not unusual for a tool to write a temp, delete the old file and then rename and/or move the temp to match the original. In such a case, the linked files in the sites can become disassociated from the common files...that is, the sites still have the old files.
If this happens to the common c.png, for example, sites a and b would still be linked to each other, but not to the common one.
You can see where this can become a major headache. NTFS can often mitigate the temp/del/rename cycle, but it's not foolproof (they're making better fools all the time). You need to test your process and have mechanisms to audit what's linked to what. You might consider scripts to relink the planned-to-be-linked files in the sites.
This is all doable, but requires some process management to keep everything like you like it.