Is this common? - Reply to applicants who are not moving along in the interview process

Yes and kind of.  I had never experienced this in writing/email on the private side, but my current government employer does something similar. We don't keep scores "in effect" for two years, but we do keep record of the scores (probably for legal reasons, because they aren't used for developmental planning).  We do have limitations on applying for new positions internally, but they are based on tenure in current position, not performance on previous interviews. 

I think the wording of the response you received could use some help, but many companies extend the courtesy of notifying unsuccessful applicants.

If someone thinks enough of our company to apply for a position, I feel it's the right thing to do to let them know if they're not moving along in the process. It's a matter of treating the applicant the way you would want to be treated. If I were applying and the company decided not to hire me, I'd want to know that so I could move on. You never know when you're going to run into these folks again.

My company is hit or miss on this.
Sometimes I will get an email stating:
"Thank you for your interest in the position of XXX Role - (Shift Data) - (Location) - (Req Number). We are always interested in considering talented people for career opportunities with our organization.
However, we have filled the job with a candidate whose qualifications more closely align with the requirements for this position.
Once again, thank you for your interest in Honeywell and we wish you every success in your career endeavors."

My wife and I came to call these the (expletive) you letter and it almost became a game to determine if I would receive the letter or some other communication first.
Often I would never hear back unless a manager went out of their way to ensure that the standard form was sent.