[BUG] Claude.md and other XXX.md instructions being ignored from context

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?

<img width="876" height="1077" alt="Image" src="https://github.com/user-attachments/assets/11e61b1f-f895-4006-8113-1fd36474f1ea" />

What Should Happen?

Claude should have ingested context from Claude .md and other XXX.md files before outputting responses to my questions.

Error Messages/Logs

Steps to Reproduce

Create a claude.md file in parent folder. Specify multiple specific files using '@' references that are in the same folder as an XXX.md instructional file. Ask Claude if it considered the XXX.md instructions.

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

claude isn't on the PATH in this shell environment. You'd need to run that from a terminal where the Claude Code CLI is installed — typically a regular Command Prompt or PowerShell session outside this context.

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Other

Additional Information

_No response_