[BUG] "Respect .gitignore in file picker" setting ignored in 2.0.75

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

The "Respect .gitignore in file picker" setting is not being honored when set to false. Files inside gitignored directories do not appear in @ autocomplete suggestions, even though the setting should include them.

What Should Happen?

Files inside gitignored directories should appear in @ autocomplete suggestions when "Respect .gitignore in file picker" is set to false.

Error Messages/Logs

No error messages. The files simply don't appear in autocomplete suggestions.

Steps to Reproduce

1. Create a project with a directory listed in .gitignore:

``
/docs/
``

1. Add some files inside that directory (e.g., docs/notes.md)
2. Open /config and set "Respect .gitignore in file picker" to false
3. Confirm ~/.claude.json contains "respectGitignore": false
4. Start typing @docs/ in the chat input
5. Observe that files inside the gitignored directory do not appear in autocomplete suggestions

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.0.70 (havent tested beyond that)

Claude Code Version

2.0.75 (Claude Code)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

• The setting appears correctly in /config menu as "Respect .gitignore in file picker: false"
• The setting is correctly saved in ~/.claude.json as "respectGitignore": false
• Downgrading to 2.0.70 via curl -fsSL https://claude.ai/install.sh | bash -s 2.0.70 restores the expected behavior
• Upgrading back to 2.0.75 breaks it again
• This is a regression introduced somewhere between 2.0.70 and 2.0.75