I ran into a weird problem today, when editing a document set. I created my own content type inheriting from the default Document Set. I added a new content type to the set and wanted to delete the default “Document” reference. I got an error telling me: “Content Type is in use”. Strange, since I hadn’t even deployed this Document Set type to any library.
After some fiddling around I finally found out what the problem was. Under “Default Content”, the drop down box will have “Document” selected. And even when you didn’t specify a file as default content, that still counts as “in use”. So simply change the dropdown selection to your own custom content type and voila: you can now remove the default document from the allowed content types list.