Several points which could have affected this decision to varying degrees.

• You need a certain amount of troops as occupation force if you don't want to lose the country and give it to the allies ( resistance for example).The Wehrmacht was an occupation force and not liked. Having not enough troops would have likely resulted in an uprising. How much forces you really need to controll Norway during WWII is debatable but i agree with your opinion that at least a significant part of these troops could have been used elsewhere to greater effect.

• Norway was important for several reason and could not be abandoned. Securing Swedens neutrality for example. Trading with Sweden was vital and could not be risked. Obviously Swedens importance diminished in the last year but Hitlers strategy was winning the war and thus the Iron Ore was needed for the future. There are obviously more factors like naval and airforce bases. An allied bridgehead would have been disastrous for the German war effort. Not so much in 45 but before that.

• Hindsight is 20/20 today everybody knows that the Allies landed in the Normandy and didn't plan to launch a major landing in Scandinavia. This possibility was not outruled by Germany. Norway was part of the Atlantic Wall and considered a potential target. Several british raids took place in Norway for example.

• Occupation forces generally have less fighting value than frontline divisions they are also equiped differently. Many of them are static divisions which means they have reduced strength and lack transportation capabilities. They were only useful for defensive purposes. To give you an idea even the divisions in Normandy were very weak formations which lacked equipment and used lower rated soldiers even tough the Normandy had obviously a higher priority than Norway. Only a part of the numbers you have mentioned represents infantry.

• These divisions would not have been used as front units immediatly because of the above mentioned point. The units would have been brought back to Germany the unit then would be refitted and equipment as regular divisions likely as Volksgrenadierdivision . Adding artillery and transportation for example. Or the soldiers would become replacement soldiers for burned out divisions. Generally the German system tried to have soldiers stay together this was common practice and improved fighting power since soldieres were fighting along side people they bonded with.

• Weakening of the Norway troops would have affected the situation at the Finish front. The German troops there would have been exposed to certain threats. ( Before 1944 obviously )

• Since you asked specific about the last months it should be noted that transporting big amount of troops over sea during this time was very dangerous. Allied airforces and uboats were wrecking havoc on German ships during the last months of the war. A lot of people died on ships during these months. Reducing the Courland pocked was very tough for example. The Gusloff and Goya alone took 15.000 people with them when they sunk.

• Manpower was not the only problem of the Wehrmacht. Having a lot of soldiers doesn't help much when you can't move them and most transportation vehicles and AFV can't operate because they lack fuel. At a certain point soldiers just become cannon fodder if the structure of the units gets destroyed. The entire system was collapsing.

Honestly i don't know when and why the decision was made not to use these troops but iam certain this possibility was discussed. Your question is interesting and i hope somebody else has a proper answer but until then the above mentioned points should have influenced this decision greatly.

In some literature, (most notably the norwegian movie "Max Manus") the explanation given for the lack of troop movement back to germany, is basically that the norwegian resistance detroyed infrastructure to halt german movements in Norway.

Its highly unlikely that this was the major reason. When Germans wanted to move units they did it. They moved several Panzer divisions to the Normandy during constant air raids and massiv resistance activities. Same for the Eastern Front were partisans were attacking supply chains and railroads for several years with a lot of more ressources and men to their disposal than the Norwegian resistance fighters.

Edit

In response to user:domini_canes:

In regards to Norwegian partisans and their impact on a possible troop movement. Rereading some passages i have found nothing to suggest that significant impact of Norwegian partisans was recorded in the books i have encountered on that subject.

One major unit which was transferred from Finnland over Norway to Germany for Defense of the Reich duty was the 6th SS mountain Division. This unit travelled from northern Norway to combat in France in about 45 days. The unit was at full strenght 20.000 men. No major problems are noted in both books. There is nothing which would suggest that a movement of over units ( likely Mountain divisions of the 20th Mountain Army ) would be hampered in a significant way. In outlined in another point that only a portion of the troops in Norway were infantry and only a portion of these men was suitable for relocation. The easy movement of the 6th SS indicates that movement of over divisions would not have posed a major problem. ( note: this means in late 44 )

• In Final Defense of the Reich: The Destruction of the 6th SS Mountain Divison "Nord"

• Hitlers Mountain Troops 1939-1945

In regards to the disparity of quality between static divisions and divisions fit for offensive operations there is a plethora of sources but since i mentioned the Normandy.

• The Germans in Normandy ( also recommended for best understanding of German POV )

• Normandy 1944: German Military Organization, Combat Power and Organizational Effectiveness

There are several reasons Norway contained so much German troops.

• The Kriegsmarine (the German navy) had most of its assets in Norway. Even if most of the large ships had been sunk, Norway was still the main u-boat base after the allies had regained France. There were large numbers of Kriegsmarine support personell (mechanics, dock workers, administrative staff, supply personell and so on) in Norway, as well as the naval crews.

• Construction troops were in Norway to keep reinforcing the Atlantic Wall that the Germans were building. Sweden continued to export iron ore to Germany up to October 1944, and Norway was vital to protect this trade. The Germans feared allied actions against Norway and kept constructing forficiations there, especially as the loss of the French iron mines had made the Germans dependent on Swedish ore again.

• The 20. Gebirgs-armee had retreated from Finland, pursued by the Finnish army, into northern Norway and arrived to the area around Narvik in April 1945 after a winter march through Finnmark (northernmost Norway) torching anything behind them and seeding the terrain with mines to prevent a pursuit by the Red Army or the Finnish Army.

• Towards the end of the war, the Luftwaffe moved a lot of what remained of their assets to Norway to have a nucleus to rebuild from, as their bases were under such attack that they could hardly maintain any kind of flying presence. With them went support and ground personell akin to the navy (mechanics, supply staff, administrative staff etc).

• The coastline of Norway is extremely long and crisscrossed by deep bays called fjords. To guard all this against an enemy landing required a large amount of troops. However, most of these were 2nd or even 3rd line garrison troops with captured French or Soviet artillery, no vehicles to move their guns or supply the troops if they should move. They were fit to sit in bunkers guarding the coast - in any kind of open battle, they would be thoroughly trashed.

The Germans did move the best of their forces from Norway, and replaced them with garrison troops. The 25. Panzer-division moved away from Norway in late August 1943, and Panzer-division 'Norwegen' that was constructed in its place never reached brigade size, and constantly bled its best officers and men to Germany to replace lossed in troops fighting on the Eastern and Western Fronts. The Germans were also hampered by the lack of naval transport and the difficulty to get units past the ever more vigilant Allied naval and air forces over the North Sea, especially when Sweden cancelled the transit agreement which had allowed the Germans to move unarmed soldiers over the Swedish railway network in August 1943.

So, the only units in Norway or Denmark that was actually capable of fighting frontline units were the mountain units of 20. Gebirgs-armee (and they were not the most stellar of the German units either, having failed to take Murmansk over three years) that arrived in Narvik in April 1945. By that time, the Germans lacked the ability to move them from Norway to the continent.

There were masisve amounts of rear-area units in the German army that surrendered in the last months of the war. Just because the Allies captured ~3,5 million Germans just before the war ended and disarmed another ~3 million just after the war ended does not mean that the Germans had 6,5 million men in combat units early 1945.

There are always going to be cooks, clerks, mechanics, drivers, labourers, railway workers, AA gunners, police and gendarmes, liasons, staff officers, medical personell, dock workers, engineers, local defence, home guard and militia and so forth that are in uniform and probably armed (even with just a rifle or a pistol) that count as soldiers when putting up numbers, but whose combat capability is so low that they are more of a drain (on supplies) than a help in a frontline combat situation.

There were two major factors to why 600,000 soldiers remained in Norway, and both had to do with deception.

One was Operation Fortitude, which completely fooled the Germans in thinking that Operation Overlord was a two part invasion with one being in Normandy, and the other in Norway. Thinking this, the Germans kept a defense force in Norway.

The second (which really is the foundation of why the Germans thought Operation Fortitude was real) were the double agents Mutt and Jeff (source http://en.wikipedia.org/wiki/Mutt_and_Jeff_(spies)), who were enlisted as spies for the Abwehr (German intelligence) but were, in fact, feeding the Germans false information because they were British agents.

Aactually the Wehrmacht DID withdraw from Norway, but only in two (of 19) of the most northern administrative areas in Norway called fylker, Finnmark and Nord-Troms.

From october 1944 to may 1945, as part of the murmanskfront, the Wehrmacht systematically withdrew from the northern parts of Norway, applying scorched earth policy as they went south.

When Finland signed the peacetreaty with the sovjet union the germans had to withdrew their troops and material from Finland, the operation was called Operation Nordlicht. They did this via a northern route into Norway. To make it as difficult as possible for the Red Army to follow the Wehrmacht, Joseph Terboven (Reichskommissar Norwegen) decided that everything be destroyed systematically as the Wehrmacht slowly made their way south. There were opposition from important members of the Wehrmacht like Nikolaus von Falkenhorst (commander of Wehrmacht in Norway), who saw the order as being needlessly harsh and destructive. Bridges, roads, churches, schools, hospitals, telegraph poles etc were either demolished or set aflame.

After WW2 it was called t the single biggest disaster to have befallen Norway since the plague, in terms of the scale of destruction and damage done (but not human lives.)

Follow up question: Why didn't Hitler invade Sweden? Was it because he couldn't afford to occupy anymore countries?