System.Timers.Timer massively inaccurate

The Parallel class uses an internal TPL facility called self replicating tasks. They are meant to consume all available thread resources. I don't know what kind of limits are in place but it seems that it's all-consuming. I have answered basically the same question a few days ago.

The Parallel class is prone to spawn insane amounts of tasks without any limit. It is easy to provoke it to literally spawn unlimited threads (2 per second). I consider the Parallel class unusable without a manually specified max-DOP. It is a time bomb that explodes in production randomly under load.

Parallel is especially poisonous in ASP.NET scenarios where many requests share one thread-pool.

Update: I forgot to make the key point. Timer ticks are queued to the thread pool. If the pool is saturated they get in line and execute at a later time. (This is the reason why timer ticks can happen concurrently or after timers are stopped.) This explains what you are seeing. The way to fix that is to fix the pool overloading.

The best fix for this particular scenario would be a custom task scheduler with a fixed amount of threads. Parallel can be made to use that task scheduler. The Parallel Extension Extras have such a scheduler. Get that work off the globally shared thread pool. Normally, I would recomment PLINQ but that is not able to take a scheduler. In a sense both Parallel and PLINQ are needlessly crippled APIs.

Don't use ThreadPool.SetMinThreads. Don't mess with global process wide settings. Just leave the poor thread pool alone.

Also, don't use Environment.ProcessorCount -1 because that wastes one core.

the timer is already executed in its own thread

The timer is a data structure in the OS kernel. There is no thread until a tick must be queued. Not sure how exactly that works but the tick is queued to the thread pool in .NET eventually. That's when the problem starts.

As a solution you could start a thread that sleeps in a loop in order to simulate a timer. That's a hack, though, because it does not fix the root cause: The overloaded thread pool.