[BUG] Working directory reverts to old path after update restart (v2.1.160)

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?

Description:

After updating to v2.1.160 and restarting the app, the working directory for all sessions (including new sessions) reverted to an old, non-existent path. This occurred despite the path having been correctly set before the update.

Steps to Reproduce:

Use Claude Code with a working directory that was previously renamed (e.g. 2025_Doc → 010_Data_2025)
Confirm all sessions are working correctly with the new path
An update notification (v2.1.160) appears in the sidebar → click to restart
After restart, both existing sessions and new sessions default to the old path
Expected Behavior:

Sessions should resume with the same working directory that was active before the restart.

Actual Behavior:

All sessions (including "New session") revert to the old, non-existent path
Error: Working directory no longer exists: C:\Users\...\2025_Doc\Claude. The folder may have been moved, deleted, or unmounted.
Previously working sessions (e.g. a project session) become inaccessible from the Recents sidebar even though the session data exists in the correct directory
A display name was also automatically changed (e.g. "suzhuki" → "suzuki") after the update, requiring manual correction
Environment:

OS: Windows 11 Pro (10.0.26200)
Claude Code version: 2.1.160
Entry point: Claude Desktop app
Workaround:
Manually editing the working directory path in the affected session allows normal use, but previously active sessions remain inaccessible from the Recents sidebar.

What Should Happen?

After restarting the app to apply an update, all sessions (including new sessions) should resume with the same working directory that was active before the restart. Previously accessible sessions should remain accessible from the Recents sidebar.

Error Messages/Logs

Working directory no longer exists: C:\Users\<username>\Drive\<FolderName>\Claude. The folder may have been moved, deleted, or unmounted.

Steps to Reproduce

Set up a working session in Claude Code Desktop with a valid working directory (e.g. C:\Users\<username>\Drive\<FolderName>\)
Rename the working directory folder at the OS level (e.g. OldFolderName → NewFolderName)
Manually update the session's working directory to the new path and confirm it works correctly
An update notification appears in the sidebar (v2.1.160) → click to restart
After restart, new sessions and existing sessions default back to the old, non-existent path
Error dialog appears: Working directory no longer exists: ...

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

v2.1.160

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_