diff --git a/packages/ui/src/components/message-item.tsx b/packages/ui/src/components/message-item.tsx
index 2f8eb26e..503464b4 100644
--- a/packages/ui/src/components/message-item.tsx
+++ b/packages/ui/src/components/message-item.tsx
@@ -1,5 +1,5 @@
 import { For, Show, createSignal } from "solid-js"
-import { Copy, Split, Trash2, Undo } from "lucide-solid"
+import { Copy, ExternalLink, Split, Trash2, Undo } from "lucide-solid"
 import type { MessageInfo, ClientPart } from "../types/message"
 import { partHasRenderableText } from "../types/message"
 import type { MessageRecord } from "../stores/message-v2/types"
@@ -8,6 +8,7 @@ import { copyToClipboard } from "../lib/clipboard"
 import { useI18n } from "../lib/i18n"
 import { showAlertDialog } from "../stores/alerts"
 import { deleteMessagePart } from "../stores/session-actions"
+import { isTauriHost } from "../lib/runtime-env"
 
 interface MessageItemProps {
   record: MessageRecord
@@ -45,6 +46,15 @@ export default function MessageItem(props: MessageItemProps) {
 
   const messageParts = () => props.parts
 
+  // User messages can temporarily include synthetic helper parts (e.g. tool traces / file reads).
+  // We only want to display the primary prompt text for the user message; other synthetic text
+  // parts should be hidden.
+  const primaryUserTextPartId = () => {
+    if (!isUser()) return null
+    const firstText = messageParts().find((part) => part?.type === "text") as { id?: string } | undefined
+    return typeof firstText?.id === "string" ? firstText.id : null
+  }
+
   const fileAttachments = () =>
     messageParts().filter((part): part is FilePart => part?.type === "file" && typeof (part as FilePart).url === "string")
 
@@ -96,7 +106,8 @@ export default function MessageItem(props: MessageItemProps) {
     }
 
     if (url.startsWith("file://")) {
-      window.open(url, "_blank", "noopener")
+      // Local filesystem URLs are not reliably downloadable from the message stream.
+      // We hide the download action for these chips.
       return
     }
 
@@ -372,6 +383,7 @@ export default function MessageItem(props: MessageItemProps) {
               messageType={props.record.role}
               instanceId={props.instanceId}
               sessionId={props.sessionId}
+              primaryUserTextPartId={primaryUserTextPartId()}
               onRendered={props.onContentRendered}
             />
           )}
@@ -398,17 +410,20 @@ export default function MessageItem(props: MessageItemProps) {
                       <img src={attachment.url} alt={name} class="h-5 w-5 rounded object-cover" />
                     </Show>
                     <span class="truncate max-w-[180px]">{name}</span>
-                    <button
-                      type="button"
-                      onClick={() => void handleAttachmentDownload(attachment)}
-                      class="attachment-download"
-                      aria-label={t("messageItem.attachment.downloadAriaLabel", { name })}
-                    >
-                      <svg class="h-3 w-3" fill="none" viewBox="0 0 24 24" stroke="currentColor">
-                        <path stroke-linecap="round" stroke-linejoin="round" stroke-width="2" d="M4 16v2a2 2 0 002 2h12a2 2 0 002-2v-2" />
-                        <path stroke-linecap="round" stroke-linejoin="round" stroke-width="2" d="M8 12l4 4 4-4m-4-8v12" />
-                      </svg>
-                    </button>
+                    <Show when={!attachment.url?.startsWith("file://")}>
+                      <button
+                        type="button"
+                        onClick={() => void handleAttachmentDownload(attachment)}
+                        class="attachment-download"
+                        aria-label={t("messageItem.attachment.downloadAriaLabel", { name })}
+                        title={t("messageItem.attachment.downloadAriaLabel", { name })}
+                      >
+                        <svg class="h-3 w-3" fill="none" viewBox="0 0 24 24" stroke="currentColor">
+                          <path stroke-linecap="round" stroke-linejoin="round" stroke-width="2" d="M4 16v2a2 2 0 002 2h12a2 2 0 002-2v-2" />
+                          <path stroke-linecap="round" stroke-linejoin="round" stroke-width="2" d="M8 12l4 4 4-4m-4-8v12" />
+                        </svg>
+                      </button>
+                    </Show>
 
                     <button
                       type="button"
diff --git a/packages/ui/src/components/message-part.tsx b/packages/ui/src/components/message-part.tsx
index 3f8405d4..4f2ff2aa 100644
--- a/packages/ui/src/components/message-part.tsx
+++ b/packages/ui/src/components/message-part.tsx
@@ -13,9 +13,12 @@ interface MessagePartProps {
   messageType?: "user" | "assistant"
   instanceId: string
   sessionId: string
+  // For user messages, keep the primary prompt text visible even when synthetic (optimistic).
+  // Other synthetic text parts (tool traces, read outputs, etc.) should be hidden.
+  primaryUserTextPartId?: string | null
   onRendered?: () => void
  }
-  export default function MessagePart(props: MessagePartProps) {
+   export default function MessagePart(props: MessagePartProps) {
 
   const { isDark } = useTheme()
   const { preferences } = useConfig()
@@ -28,8 +31,19 @@ interface MessagePartProps {
   const shouldHideTextPart = () => {
     const part = props.part
     if (!part || part.type !== "text") return false
-    // Keep optimistic user prompts visible; hide synthetic assistant text.
-    return Boolean((part as any).synthetic) && props.messageType !== "user"
+
+    const isSynthetic = Boolean((part as any).synthetic)
+    if (!isSynthetic) return false
+
+    // Keep optimistic user prompts visible; hide other synthetic user helper parts.
+    if (props.messageType === "user") {
+      const primaryId = props.primaryUserTextPartId
+      if (!primaryId) return false
+      return part.id !== primaryId
+    }
+
+    // Hide synthetic assistant text.
+    return true
   }
 
 
diff --git a/packages/ui/src/components/prompt-input/usePromptKeyDown.ts b/packages/ui/src/components/prompt-input/usePromptKeyDown.ts
index 18d1746e..ab979216 100644
--- a/packages/ui/src/components/prompt-input/usePromptKeyDown.ts
+++ b/packages/ui/src/components/prompt-input/usePromptKeyDown.ts
@@ -183,9 +183,25 @@ export function usePromptKeyDown(options: UsePromptKeyDownOptions) {
 
         if (isDeletingFromEnd || isDeletingFromStart || isSelected) {
           const currentAttachments = options.getAttachments()
-          const attachment = currentAttachments.find(
-            (a) => (a.source.type === "file" || a.source.type === "agent") && a.filename === name,
-          )
+          const attachment = currentAttachments.find((a) => {
+            if (a.source.type === "agent") {
+              return a.filename === name
+            }
+            if (a.source.type === "file") {
+              // Match either by filename (basename) or by path (for full paths like @docs/file.txt)
+              return (
+                a.filename === name ||
+                a.source.path === name ||
+                a.source.path.endsWith("/" + name) ||
+                a.source.path === name.replace(/\/$/, "")
+              )
+            }
+            if (a.source.type === "text") {
+              // For text attachments (path-only mentions), match by value
+              return a.source.value === name || a.source.value.endsWith("/" + name)
+            }
+            return false
+          })
 
           if (attachment) {
             e.preventDefault()
@@ -205,6 +221,14 @@ export function usePromptKeyDown(options: UsePromptKeyDownOptions) {
               textarea.setSelectionRange(mentionStart, mentionStart)
             }, 0)
 
+            // Check if there are any @ remaining in the text - if not, close the picker
+            if (!newText.includes("@") && options.isPickerOpen()) {
+              options.closePicker()
+              // Clear ignoredAtPositions since we deleted the entire @mention
+              // This ensures typing @ again will open the picker
+              options.setIgnoredAtPositions(new Set())
+            }
+
             return
           }
         }
diff --git a/packages/ui/src/components/prompt-input/usePromptPicker.ts b/packages/ui/src/components/prompt-input/usePromptPicker.ts
index 98e53bc6..b0056bc9 100644
--- a/packages/ui/src/components/prompt-input/usePromptPicker.ts
+++ b/packages/ui/src/components/prompt-input/usePromptPicker.ts
@@ -204,13 +204,16 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
       }
 
       const folderMention =
-        relativePath === "." || relativePath === ""
-          ? "/"
-          : relativePath.replace(/\/+$/, "") + "/"
+        relativePath === "." || relativePath === "" || relativePath === "./"
+          ? "./"
+          : (relativePath.startsWith("./") ? relativePath.replace(/\/+$/, "") + "/" : relativePath.replace(/^\.\//, "").replace(/\/+$/, "") + "/")
 
       const normalizedFolderPath = (() => {
         const trimmed = relativePath.replace(/\/+$/, "")
-        return trimmed.length > 0 ? trimmed : "."
+        // If it's root "./", just return "./"
+        if (trimmed === "" || trimmed === ".") return "./"
+        // Otherwise remove any leading ./ and add ./ prefix
+        return "./" + trimmed.replace(/^\.\//, "")
       })()
 
       const addPathOnlyAttachment = (value: string) => {
@@ -236,13 +239,14 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
         const mentionText = `@${folderMention}`
 
         if (action === "shiftEnter") {
-          // SHIFT+ENTER on directory: attach path as text only.
-          addPathOnlyAttachment(folderMention)
+          // SHIFT+ENTER on directory: keep @path in prompt, add text attachment, remove @ when sending
+          // Always prefix with ./ for consistency
+          const normalizedFolderPathWithPrefix = normalizedFolderPath.startsWith("./") ? normalizedFolderPath : "./" + normalizedFolderPath
+          addPathOnlyAttachment(normalizedFolderPathWithPrefix)
           replaceMentionToken(mentionText, { trailingSpace: true })
         } else {
           // ENTER/click on directory: attach as a file part pointing at a file:// directory URL.
-          const dirLabel =
-            normalizedFolderPath === "." ? "/" : normalizedFolderPath.split("/").pop() || normalizedFolderPath
+          const dirLabel = normalizedFolderPath === "./" ? "./" : normalizedFolderPath.split("/").pop() || normalizedFolderPath
           const dirFilename = dirLabel.endsWith("/") ? dirLabel : `${dirLabel}/`
 
           const existingAttachments = getAttachments(options.instanceId(), options.sessionId())
@@ -274,11 +278,15 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
         }
 
         if (action === "shiftEnter") {
-          // SHIFT+ENTER on file: attach path as text only.
-          addPathOnlyAttachment(normalizedPath)
-          replaceMentionToken(`@${normalizedPath}`, { trailingSpace: true })
+          // SHIFT+ENTER on file: keep @path in prompt, add text attachment, remove @ when sending
+          // Always prefix with ./ for consistency
+          const normalizedPathWithPrefix = normalizedPath.startsWith("./") ? normalizedPath : "./" + normalizedPath
+          addPathOnlyAttachment(normalizedPathWithPrefix)
+          replaceMentionToken(`@${normalizedPathWithPrefix}`, { trailingSpace: true })
         } else {
           // ENTER/click on file: attach file (existing behavior).
+          // Always prefix with ./ for consistency
+          const normalizedPathWithPrefix = normalizedPath.startsWith("./") ? normalizedPath : "./" + normalizedPath
           const pathSegments = normalizedPath.split("/")
           const filename = (() => {
             const candidate = pathSegments[pathSegments.length - 1] || normalizedPath
@@ -287,12 +295,12 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
 
           const existingAttachments = getAttachments(options.instanceId(), options.sessionId())
           const alreadyAttached = existingAttachments.some(
-            (att) => att.source.type === "file" && att.source.path === normalizedPath,
+            (att) => att.source.type === "file" && att.source.path === normalizedPathWithPrefix,
           )
 
           if (!alreadyAttached) {
             const attachment = createFileAttachment(
-              normalizedPath,
+              normalizedPathWithPrefix,
               filename,
               "text/plain",
               undefined,
@@ -301,7 +309,7 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
             addAttachment(options.instanceId(), options.sessionId(), attachment)
           }
 
-          replaceMentionToken(`@${normalizedPath}`, { trailingSpace: true })
+          replaceMentionToken(`@${normalizedPathWithPrefix}`, { trailingSpace: true })
         }
       }
     }
@@ -316,6 +324,28 @@ export function usePromptPicker(options: PromptPickerOptions): PromptPickerContr
     const pos = atPosition()
     if (pickerMode() === "mention" && pos !== null) {
       setIgnoredAtPositions((prev) => new Set(prev).add(pos))
+
+      // Remove the partial @mention text from the textarea when ESC is pressed
+      const textarea = options.getTextarea()
+      if (textarea) {
+        const currentPrompt = options.prompt()
+        const cursorPos = textarea.selectionStart
+        // Remove text from @ position to cursor position
+        const before = currentPrompt.substring(0, pos)
+        const after = currentPrompt.substring(cursorPos)
+        options.setPrompt(before + after)
+
+        // Restore cursor position to where @ was
+        setTimeout(() => {
+          const nextTextarea = options.getTextarea()
+          if (nextTextarea) {
+            nextTextarea.setSelectionRange(pos, pos)
+          }
+        }, 0)
+
+        // Clear ignoredAtPositions so typing @ again will work
+        setIgnoredAtPositions(new Set<number>())
+      }
     }
     setShowPicker(false)
     setAtPosition(null)
diff --git a/packages/ui/src/components/unified-picker.tsx b/packages/ui/src/components/unified-picker.tsx
index 7284d145..70a0be97 100644
--- a/packages/ui/src/components/unified-picker.tsx
+++ b/packages/ui/src/components/unified-picker.tsx
@@ -51,9 +51,7 @@ function normalizeQuery(rawQuery: string) {
   if (!trimmed) {
     return ""
   }
-  if (trimmed === "." || trimmed === "./") {
-    return ""
-  }
+  // Don't normalize "." - it's used for workspace root
   return trimmed.replace(/^(\.\/)+/, "").replace(/^\/+/, "")
 }
 
@@ -268,6 +266,13 @@ const UnifiedPicker: Component<UnifiedPickerProps> = (props) => {
     const workspaceChanged = lastWorkspaceId !== props.workspaceId
     const queryChanged = lastQuery !== props.searchQuery
 
+    if (queryChanged) {
+      // Reset selectedIndex to 0 when query changes to avoid ghost state
+      // This ensures proper highlighting when navigating back to root or changing queries
+      setSelectedIndex(0)
+      resetScrollPosition()
+    }
+
     if (!isInitialized() || workspaceChanged || queryChanged) {
       setIsInitialized(true)
       lastWorkspaceId = props.workspaceId
@@ -343,7 +348,22 @@ const UnifiedPicker: Component<UnifiedPickerProps> = (props) => {
       return items
     }
 
-    filteredAgents().forEach((agent) => items.push({ type: "agent", agent }))
+    // Add root directory as first item only when query is EXACTLY "." or "./" (not "./docs/")
+    const isExactRootQuery = props.searchQuery === "." || props.searchQuery === "./"
+    if (mode() === "mention" && isExactRootQuery) {
+      const rootFile: FileItem = {
+        path: ".",
+        relativePath: ".",
+        isDirectory: true,
+        isGitFile: false,
+      }
+      items.push({ type: "file", file: rootFile })
+    }
+
+    // Don't show agents for exact root path queries
+    if (!isExactRootQuery) {
+      filteredAgents().forEach((agent) => items.push({ type: "agent", agent }))
+    }
     files().forEach((file) => items.push({ type: "file", file }))
     return items
   }
@@ -467,7 +487,7 @@ const UnifiedPicker: Component<UnifiedPickerProps> = (props) => {
             </For>
           </Show>
 
-          <Show when={mode() === "mention" && agentCount() > 0}>
+          <Show when={mode() === "mention" && agentCount() > 0 && !(props.searchQuery === "." || props.searchQuery === "./")}>
             <div class="dropdown-section-header">
               {t("unifiedPicker.sections.agents")}
             </div>
@@ -522,10 +542,39 @@ const UnifiedPicker: Component<UnifiedPickerProps> = (props) => {
             </For>
           </Show>
 
-          <Show when={mode() === "mention" && fileCount() > 0}>
+          <Show when={mode() === "mention" && (fileCount() > 0 || props.searchQuery === "." || props.searchQuery === "./")}>
             <div class="dropdown-section-header">
               {t("unifiedPicker.sections.files")}
             </div>
+            <Show when={props.searchQuery === "." || props.searchQuery === "./"}>
+              <div
+                class={`dropdown-item py-1.5 ${
+                  selectedIndex() === 0 ? "dropdown-item-highlight" : ""
+                }`}
+                data-picker-selected={selectedIndex() === 0}
+                onClick={() => {
+                  const rootFile: FileItem = {
+                    path: ".",
+                    relativePath: ".",
+                    isDirectory: true,
+                    isGitFile: false,
+                  }
+                  props.onSelect({ type: "file", file: rootFile }, "click")
+                }}
+              >
+                <div class="flex items-center gap-2 text-sm">
+                  <svg class="dropdown-icon h-4 w-4 text-blue-500" fill="none" viewBox="0 0 24 24" stroke="currentColor">
+                    <path
+                      stroke-linecap="round"
+                      stroke-linejoin="round"
+                      stroke-width="2"
+                      d="M3 7v10a2 2 0 002 2h14a2 2 0 002-2V9a2 2 0 00-2-2h-6l-2-2H5a2 2 0 00-2 2z"
+                    />
+                  </svg>
+                  <span class="font-mono">. {t("unifiedPicker.sections.workspaceRoot")}</span>
+                </div>
+              </div>
+            </Show>
             <For each={files()}>
               {(file) => {
                 const itemIndex = allItems().findIndex(
diff --git a/packages/ui/src/lib/i18n/messages/en/commands.ts b/packages/ui/src/lib/i18n/messages/en/commands.ts
index 66ff78f7..8ddd31db 100644
--- a/packages/ui/src/lib/i18n/messages/en/commands.ts
+++ b/packages/ui/src/lib/i18n/messages/en/commands.ts
@@ -158,6 +158,7 @@ export const commandMessages = {
   "unifiedPicker.sections.commands": "COMMANDS",
   "unifiedPicker.sections.agents": "AGENTS",
   "unifiedPicker.sections.files": "FILES",
+  "unifiedPicker.sections.workspaceRoot": "WORKSPACE ROOT",
   "unifiedPicker.badge.subagent": "subagent",
   "unifiedPicker.footer.navigate": "navigate",
   "unifiedPicker.footer.select": "select",
diff --git a/packages/ui/src/lib/prompt-placeholders.ts b/packages/ui/src/lib/prompt-placeholders.ts
index 1d8ee1eb..b5c8ee55 100644
--- a/packages/ui/src/lib/prompt-placeholders.ts
+++ b/packages/ui/src/lib/prompt-placeholders.ts
@@ -1,12 +1,59 @@
-import type { Attachment } from "../types/attachment"
+import type { Attachment, FileSource } from "../types/attachment"
 
 export function resolvePastedPlaceholders(prompt: string, attachments: Attachment[] = []): string {
-  if (!prompt || !prompt.includes("[pasted #")) {
+  if (!prompt) {
     return prompt
   }
 
+  const fileAttachments = new Set(
+    attachments
+      .filter((a): a is Attachment & { source: FileSource } => a.source.type === "file")
+      .map((a) => a.source.path),
+  )
+
+  const pathAttachments = new Set(
+    attachments
+      .filter((a) => a.source.type === "text" && typeof a.display === "string" && a.display.startsWith("path:"))
+      .map((a) => (a.source as { value: string }).value),
+  )
+
+  let result = prompt
+
+  // Step 1: Handle root paths FIRST using unique placeholders
+  // Replace longer pattern first to avoid partial match issues
+  result = result.replace(/@(\.\/)/g, "___ROOT___")
+  result = result.replace(/@(\.)(?!\.)/g, "___ROOT_NOSLASH___")
+  // Note: The regex @(\.)(?!\.) means @. NOT followed by another .
+
+  // Step 2: Build set of non-root paths
+  const allPaths = new Set<string>()
+  for (const p of fileAttachments) {
+    if (p && p !== "." && p !== "./") allPaths.add(p)
+  }
+  for (const p of pathAttachments) {
+    if (p && p !== "." && p !== "./") allPaths.add(p)
+  }
+
+  // Step 3: Replace @path with ./path for non-root paths
+  for (const path of allPaths) {
+    if (!path) continue
+    const withoutPrefix = path.startsWith("./") ? path.slice(2) : path
+    const withPrefix = path.startsWith("./") ? path : "./" + path
+    result = result.replace("@" + withoutPrefix, withPrefix)
+    result = result.replace("@" + withoutPrefix + "/", withPrefix + "/")
+  }
+
+  // Step 4: Convert placeholders back to ./
+  result = result.replace("___ROOT___", "./")
+  result = result.replace("___ROOT_NOSLASH___", "./")
+
+  // Step 5: Resolve [pasted #N] placeholders
+  if (!result.includes("[pasted #")) {
+    return result
+  }
+
   if (!attachments || attachments.length === 0) {
-    return prompt
+    return result
   }
 
   const lookup = new Map<string, string>()
@@ -15,7 +62,7 @@ export function resolvePastedPlaceholders(prompt: string, attachments: Attachmen
     const source = attachment?.source
     if (!source || source.type !== "text") continue
     const display = attachment?.display
-    const value = source.value
+    const value = (source as { value?: string }).value
     if (typeof display !== "string" || typeof value !== "string") continue
     const match = display.match(/pasted #(\d+)/)
     if (!match) continue
@@ -26,10 +73,10 @@ export function resolvePastedPlaceholders(prompt: string, attachments: Attachmen
   }
 
   if (lookup.size === 0) {
-    return prompt
+    return result
   }
 
-  return prompt.replace(/\[pasted #(\d+)\]/g, (fullMatch) => {
+  return result.replace(/\[pasted #(\d+)\]/g, (fullMatch) => {
     const replacement = lookup.get(fullMatch)
     return typeof replacement === "string" ? replacement : fullMatch
   })
diff --git a/packages/ui/src/stores/session-actions.ts b/packages/ui/src/stores/session-actions.ts
index 4771fae3..456f5456 100644
--- a/packages/ui/src/stores/session-actions.ts
+++ b/packages/ui/src/stores/session-actions.ts
@@ -140,8 +140,11 @@ async function sendMessage(
         const display: string | undefined = att.display
         const value: unknown = source.value
         const isPastedPlaceholder = typeof display === "string" && /^pasted #\d+/.test(display)
+        const isPathPlaceholder = typeof display === "string" && /^path:/.test(display)
 
-        if (isPastedPlaceholder || typeof value !== "string") {
+        // Skip path: attachments from being sent as separate parts (content is already in prompt)
+        // Skip pasted placeholders too (already resolved in prompt)
+        if (isPastedPlaceholder || isPathPlaceholder || typeof value !== "string") {
           continue
         }