[BUG] Claude ignores working directory from <env> and uses hardcoded absolute paths to wrong directories

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?

Claude consistently ignores the working directory provided in <env> and instead uses hardcoded absolute paths to directories outside the current project, despite:

1. Clear working directory in <env>
2. Explicit project CLAUDE.md instructions stating "ALWAYS use working directory from <env> as base"
3. Multiple user corrections during the session

What Should Happen?

Expected Behavior (worked in previous versions):

• Claude respects <env> working directory
• Uses relative paths from working directory
• Only works in the specified project directory

Error Messages/Logs

Actual Behavior (regression in current version):
  - Claude uses hardcoded absolute paths like /home/user/projects/system_a/...
  - Edits files in WRONG directory (system_b) instead of current working directory (system_a)
  - Continues this pattern even after corrections
  - Ignores project-specific CLAUDE.md instructions

Steps to Reproduce

1. Session starts in: /home/user/projects/system_a/templates
2. <env> clearly shows: Working directory: /home/user/projects/system_a/templates
3. Project CLAUDE.md contains:

## Repository Locations
ALWAYS use the working directory from <env> as base:

• Module/feature: module/feature/ (relative from working dir)
• Templates: templates/ (relative from working dir)

NEVER use hardcoded paths

1. User requests: "fix sorting in grid"
2. Claude edits files in BOTH:

• /home/user/projects/system_a/... (correct)
• /home/user/projects/system_b/... (WRONG - different project!)

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

<2.0.1

Claude Code Version

2.0.1

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

Concrete Examples from Session:

User repeatedly had to correct:

• "wrong directory again! it's system_a"
• "you edited system_b again! check this"
• "this should be in system_a only!"
• "why do you keep editing both dirs!"

Each time Claude acknowledged but continued the same pattern.

Impact:

• Files edited in wrong project directories
• Wasted time reverting incorrect changes
• User frustration
• Loss of trust in Claude respecting project boundaries

Previous Behavior:
User confirms this never happened in previous Claude versions - this is a regression.

Root Cause (suspected):
Claude appears to be using pattern matching from earlier in conversation instead of actively checking <env> working directory for each operation. It creates a mental model of "these two directories need to be kept in sync" and applies it incorrectly.