[BUG] EEXIST: file already exists, mkdir. Regression in v2.1.69

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 Edit tool throws an EEXIST: file already exists, mkdir error when editing files in v2.1.69. This did not occur in previous versions. The affected path is a OneDrive directory. Maybe possible the spaces in the path name are a contributing factor?

What Should Happen?

Claude is able to successfully edit the file.

Error Messages/Logs

EEXIST: file already exists, mkdir 

(after looking into Edit Failed)

Steps to Reproduce

To Reproduce

1. Install Claude Code v2.1.69
2. Ask Claude Code to edit a file on OneDrive
3. Observe the error

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.68

Claude Code Version

2.1.69

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

Let me know if you have any questions for me!