I am using vmix 26 on a intel i7 10700k cpu with 32gb of memory.

When i add local sources like video files and photos memory usage is 100%. There are over 350 of these sources.

Is this normal behavior for Vmix?

I dont have any 3rd party anti virus installed.

I am not streaming anything, just using Vmix as a method to playback video files that are feed to the vision mixer.

The high memory usage make vmix very unstable and it crashes a lot.
What could be the problem?

Yes it is normal because of how the gpu memory work between gpu and vmix. What model is your GPU? If you have a rtx 30x and up, see if you can enable the resizeable bar option so you will be able to use more gpu memory. The list input that doggy suggests is a good way to reduce the inputs and gpu memory.

So no resizeable bar. If you not allready do it,enable from vmix settings-->perfomance the high input perfomance mode.Also if you enable the show gpu/cpu alerts and making tests you will find from what point and up gives you the gpu overload message that causes vmix to lag