[BUG] Desktop app folder picker does nothing — cannot change working directory

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?

In the Claude Code desktop app on Windows 11, the folder picker under Customize does nothing when selecting a working directory for a new session. The dialog opens, a folder can be selected, but the working directory never changes. The app silently ignores the selection and loads the wrong project. No error is shown.

Previously, users could change the working directory mid-session in the chat window. This no longer works with no documentation, warning, or explanation. Users with multiple projects have no way to switch projects from inside the desktop app.

This caused significant wasted time and token consumption as the AI loaded the wrong project context without any indication something was wrong.

What Should Happen?

Selecting a folder in the Customize folder picker should set the working directory for the new session and automatically load the correct CLAUDE.md and memory files for that project.

The app should also clearly surface a way to switch projects/working directories mid-session, or display a visible warning if the feature has been removed.

Error Messages/Logs

Silent failure — no error displayed when folder picker selection is ignored.

Separate warning shown on launch:
Auth conflict: Both a token (claude.ai) and an API key (ANTHROPIC_API_KEY) are set. This may lead to unexpected behavior.

Steps to Reproduce

1. Open Claude Code desktop app on Windows 11 Pro
2. Click New Session in left sidebar
3. Click Customize
4. Use folder picker to select a different working directory
5. Start the session
6. Observe: wrong project loads, selected folder was ignored silently

Additional context: App defaults to C:\WINDOWS\system32 as working directory on launch, causing it to load the wrong project every session.

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.133 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Windows 11 Pro 10.0.26200 | Claude Code Desktop App v2.1.133 | Multiple projects configured with separate CLAUDE.md files and memory folders synced via OneDrive. The bug causes the app to always default to the last used project (or C:\WINDOWS\system32) with no way to switch from inside the desktop app chat window.