3 files changed, 68 insertions, 24 deletions

diff --git a/packages/cli/src/config/config.ts b/packages/cli/src/config/config.ts
index a147bca8..9274b65e 100644
--- a/packages/cli/src/config/config.ts
+++ b/packages/cli/src/config/config.ts
@@ -4,6 +4,9 @@
  * SPDX-License-Identifier: Apache-2.0
  */
 
+import * as fs from 'fs';
+import * as path from 'path';
+import { homedir } from 'node:os';
 import yargs from 'yargs/yargs';
 import { hideBin } from 'yargs/helpers';
 import process from 'node:process';
@@ -244,16 +247,24 @@ export async function loadHierarchicalGeminiMemory(
   memoryImportFormat: 'flat' | 'tree' = 'tree',
   fileFilteringOptions?: FileFilteringOptions,
 ): Promise<{ memoryContent: string; fileCount: number }> {
+  // FIX: Use real, canonical paths for a reliable comparison to handle symlinks.
+  const realCwd = fs.realpathSync(path.resolve(currentWorkingDirectory));
+  const realHome = fs.realpathSync(path.resolve(homedir()));
+  const isHomeDirectory = realCwd === realHome;
+
+  // If it is the home directory, pass an empty string to the core memory
+  // function to signal that it should skip the workspace search.
+  const effectiveCwd = isHomeDirectory ? '' : currentWorkingDirectory;
+
   if (debugMode) {
     logger.debug(
       `CLI: Delegating hierarchical memory load to server for CWD: ${currentWorkingDirectory} (memoryImportFormat: ${memoryImportFormat})`,
     );
   }
 
-  // Directly call the server function.
-  // The server function will use its own homedir() for the global path.
+  // Directly call the server function with the corrected path.
   return loadServerHierarchicalMemory(
-    currentWorkingDirectory,
+    effectiveCwd,
     debugMode,
     fileService,
     extensionContextFilePaths,
diff --git a/packages/cli/src/config/settings.test.ts b/packages/cli/src/config/settings.test.ts
index 5a54e46e..b8ecbb62 100644
--- a/packages/cli/src/config/settings.test.ts
+++ b/packages/cli/src/config/settings.test.ts
@@ -59,7 +59,21 @@ const MOCK_WORKSPACE_SETTINGS_PATH = pathActual.join(
   'settings.json',
 );
 
-vi.mock('fs');
+vi.mock('fs', async (importOriginal) => {
+  // Get all the functions from the real 'fs' module
+  const actualFs = await importOriginal<typeof fs>();
+
+  return {
+    ...actualFs, // Keep all the real functions
+    // Now, just override the ones we need for the test
+    existsSync: vi.fn(),
+    readFileSync: vi.fn(),
+    writeFileSync: vi.fn(),
+    mkdirSync: vi.fn(),
+    realpathSync: (p: string) => p,
+  };
+});
+
 vi.mock('strip-json-comments', () => ({
   default: vi.fn((content) => content),
 }));
diff --git a/packages/cli/src/config/settings.ts b/packages/cli/src/config/settings.ts
index 4f701c6d..a875ffc1 100644
--- a/packages/cli/src/config/settings.ts
+++ b/packages/cli/src/config/settings.ts
@@ -312,6 +312,22 @@ export function loadSettings(workspaceDir: string): LoadedSettings {
   let workspaceSettings: Settings = {};
   const settingsErrors: SettingsError[] = [];
   const systemSettingsPath = getSystemSettingsPath();
+
+  // FIX: Resolve paths to their canonical representation to handle symlinks
+  const resolvedWorkspaceDir = path.resolve(workspaceDir);
+  const resolvedHomeDir = path.resolve(homedir());
+
+  let realWorkspaceDir = resolvedWorkspaceDir;
+  try {
+    // fs.realpathSync gets the "true" path, resolving any symlinks
+    realWorkspaceDir = fs.realpathSync(resolvedWorkspaceDir);
+  } catch (_e) {
+    // This is okay. The path might not exist yet, and that's a valid state.
+  }
+
+  // We expect homedir to always exist and be resolvable.
+  const realHomeDir = fs.realpathSync(resolvedHomeDir);
+
   // Load system settings
   try {
     if (fs.existsSync(systemSettingsPath)) {
@@ -356,28 +372,31 @@ export function loadSettings(workspaceDir: string): LoadedSettings {
     'settings.json',
   );
 
-  // Load workspace settings
-  try {
-    if (fs.existsSync(workspaceSettingsPath)) {
-      const projectContent = fs.readFileSync(workspaceSettingsPath, 'utf-8');
-      const parsedWorkspaceSettings = JSON.parse(
-        stripJsonComments(projectContent),
-      ) as Settings;
-      workspaceSettings = resolveEnvVarsInObject(parsedWorkspaceSettings);
-      if (workspaceSettings.theme && workspaceSettings.theme === 'VS') {
-        workspaceSettings.theme = DefaultLight.name;
-      } else if (
-        workspaceSettings.theme &&
-        workspaceSettings.theme === 'VS2015'
-      ) {
-        workspaceSettings.theme = DefaultDark.name;
+  // This comparison is now much more reliable.
+  if (realWorkspaceDir !== realHomeDir) {
+    // Load workspace settings
+    try {
+      if (fs.existsSync(workspaceSettingsPath)) {
+        const projectContent = fs.readFileSync(workspaceSettingsPath, 'utf-8');
+        const parsedWorkspaceSettings = JSON.parse(
+          stripJsonComments(projectContent),
+        ) as Settings;
+        workspaceSettings = resolveEnvVarsInObject(parsedWorkspaceSettings);
+        if (workspaceSettings.theme && workspaceSettings.theme === 'VS') {
+          workspaceSettings.theme = DefaultLight.name;
+        } else if (
+          workspaceSettings.theme &&
+          workspaceSettings.theme === 'VS2015'
+        ) {
+          workspaceSettings.theme = DefaultDark.name;
+        }
       }
+    } catch (error: unknown) {
+      settingsErrors.push({
+        message: getErrorMessage(error),
+        path: workspaceSettingsPath,
+      });
     }
-  } catch (error: unknown) {
-    settingsErrors.push({
-      message: getErrorMessage(error),
-      path: workspaceSettingsPath,
-    });
   }
 
   return new LoadedSettings(