upgrade_move_att2disk executes "select * from mantis_bug_file_table..." which apparently gives resultset that is too large to handle by database/PHP or something in between.

The query fails, and because error is silenced, tool misinterprets it as if there was nothing that needed moving.

Change of @db_query_bound( $query ); to db_query_bound( $query , null, 100); works around the issue (the query should be repeated as many times as needed of course).