[BUG] Path collision in project state directory still exists (Reopening #7009)

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?

When Claude Code encodes project absolute paths to create session/state folders (e.g., in ~/.claude/projects/), it simply replaces / with -. This creates a severe naming collision for similarly named nested directories, which leads to context pollution, state overriding, and history contamination between completely different codebases.

Because kebab-case (my-project) is the industry standard for project naming, this collision is highly likely to occur. When it does, conversation histories, memories, and codebase contexts from Project A will cross-contaminate Project B, which is particularly dangerous for an AI coding agent.

What Should Happen?

To maintain human readability while preventing collisions, the folder naming logic should append a short hash (e.g., MD5/SHA) of the true absolute path.
For example: -Users-username-Projects-demo-app-[8-char-hash]

Error Messages/Logs

Steps to Reproduce

1. Create two separate project directories:

• ~/Projects/demo-app
• ~/Projects/demo/app

1. Run claude in both directories.
2. Observe the generated state directory in ~/.claude/projects/. Both sessions will map to the exact same directory name: -Users-username-Projects-demo-app

Claude Model

None

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.162

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_