diff --git a/src/integrations/WorkspaceTracker.ts b/src/integrations/WorkspaceTracker.ts
index d868a15..3ef0685 100644
--- a/src/integrations/WorkspaceTracker.ts
+++ b/src/integrations/WorkspaceTracker.ts
@@ -5,6 +5,7 @@ import { ClaudeDevProvider } from "../providers/ClaudeDevProvider"
 
 const cwd = vscode.workspace.workspaceFolders?.map((folder) => folder.uri.fsPath).at(0)
 
+// Note: this is not a drop-in replacement for listFiles at the start of tasks, since that will be done for Desktops when there is no workspace selected
 class WorkspaceTracker {
 	private providerRef: WeakRef<ClaudeDevProvider>
 	private disposables: vscode.Disposable[] = []
diff --git a/webview-ui/src/components/ChatTextArea.tsx b/webview-ui/src/components/ChatTextArea.tsx
index fb9e5f7..acf3eff 100644
--- a/webview-ui/src/components/ChatTextArea.tsx
+++ b/webview-ui/src/components/ChatTextArea.tsx
@@ -92,6 +92,10 @@ const ChatTextArea = forwardRef<HTMLTextAreaElement, ChatTextAreaProps>(
 
 		const handleMentionSelect = useCallback(
 			(type: string, value: string) => {
+				if (type === "noResults") {
+					return
+				}
+
 				if (value === "file" || value === "folder") {
 					setSelectedType(type.toLowerCase())
 					setSearchQuery("")
@@ -147,7 +151,9 @@ const ChatTextArea = forwardRef<HTMLTextAreaElement, ChatTextAreaProps>(
 							if (optionsLength === 0) return prevIndex
 
 							// Find selectable options (non-URL types)
-							const selectableOptions = options.filter((option) => option.type !== "url")
+							const selectableOptions = options.filter(
+								(option) => option.type !== "url" && option.type !== "noResults"
+							)
 
 							if (selectableOptions.length === 0) return -1 // No selectable options
 
@@ -170,7 +176,7 @@ const ChatTextArea = forwardRef<HTMLTextAreaElement, ChatTextAreaProps>(
 						const selectedOption = getContextMenuOptions(searchQuery, selectedType, searchPaths)[
 							selectedMenuIndex
 						]
-						if (selectedOption && selectedOption.type !== "url") {
+						if (selectedOption && selectedOption.type !== "url" && selectedOption.type !== "noResults") {
 							handleMentionSelect(selectedOption.type, selectedOption.value)
 						}
 						return
@@ -297,6 +303,7 @@ const ChatTextArea = forwardRef<HTMLTextAreaElement, ChatTextAreaProps>(
 					const newCursorPosition = cursorPosition + trimmedUrl.length + 1
 					setCursorPosition(newCursorPosition)
 					setIntendedCursorPosition(newCursorPosition)
+					setShowContextMenu(false)
 					return
 				}
 
diff --git a/webview-ui/src/components/ContextMenu.tsx b/webview-ui/src/components/ContextMenu.tsx
index 8c18857..0de66ab 100644
--- a/webview-ui/src/components/ContextMenu.tsx
+++ b/webview-ui/src/components/ContextMenu.tsx
@@ -52,6 +52,7 @@ const ContextMenu: React.FC<ContextMenuProps> = ({
 			case "folder":
 			case "problems":
 			case "url":
+			case "noResults":
 				return (
 					<span
 						style={{
@@ -67,7 +68,7 @@ const ContextMenu: React.FC<ContextMenuProps> = ({
 							? "Problems"
 							: option.value === "url"
 							? "Paste URL to scrape"
-							: ""}
+							: "No results found"}
 					</span>
 				)
 			default:
@@ -113,21 +114,25 @@ const ContextMenu: React.FC<ContextMenuProps> = ({
 				{filteredOptions.map((option, index) => (
 					<div
 						key={option.value}
-						onClick={() => option.type !== "url" && onSelect(option.type, option.value)}
+						onClick={() =>
+							option.type !== "url" && option.type !== "noResults" && onSelect(option.type, option.value)
+						}
 						style={{
 							padding: "8px 12px",
-							cursor: option.type !== "url" ? "pointer" : "default",
+							cursor: option.type !== "url" && option.type !== "noResults" ? "pointer" : "default",
 							color: "var(--vscode-dropdown-foreground)",
 							borderBottom: "1px solid var(--vscode-dropdown-border)",
 							display: "flex",
 							alignItems: "center",
 							justifyContent: "space-between",
 							backgroundColor:
-								index === selectedIndex && option.type !== "url"
+								index === selectedIndex && option.type !== "url" && option.type !== "noResults"
 									? "var(--vscode-list-activeSelectionBackground)"
 									: "",
 						}}
-						onMouseEnter={() => option.type !== "url" && setSelectedIndex(index)}>
+						onMouseEnter={() =>
+							option.type !== "url" && option.type !== "noResults" && setSelectedIndex(index)
+						}>
 						<div
 							style={{
 								display: "flex",
diff --git a/webview-ui/src/utils/mention-context.ts b/webview-ui/src/utils/mention-context.ts
index 2809cea..4f245a8 100644
--- a/webview-ui/src/utils/mention-context.ts
+++ b/webview-ui/src/utils/mention-context.ts
@@ -60,16 +60,19 @@ export function getContextMenuOptions(
 ): { type: string; value: string; icon: string }[] {
 	if (query === "") {
 		if (selectedType === "file") {
-			return searchPaths
+			const files = searchPaths
 				.filter((item) => item.type === "file")
 				.map((item) => ({ type: "file", value: item.path, icon: "file" }))
+			return files.length > 0 ? files : [{ type: "noResults", value: "noResults", icon: "info" }]
 		}
 
 		if (selectedType === "folder") {
-			return searchPaths
+			const folders = searchPaths
 				.filter((item) => item.type === "folder")
 				.map((item) => ({ type: "folder", value: item.path, icon: "folder" }))
+			return folders.length > 0 ? folders : [{ type: "noResults", value: "noResults", icon: "info" }]
 		}
+
 		return [
 			{ type: "url", value: "url", icon: "link" },
 			{
@@ -98,17 +101,7 @@ export function getContextMenuOptions(
 				icon: item.type === "file" ? "file" : item.type === "problems" ? "warning" : "folder",
 			}))
 		} else {
-			// If no matches, show all options
-			return [
-				{ type: "url", value: "url", icon: "link" },
-				{
-					type: "problems",
-					value: "problems",
-					icon: "warning",
-				},
-				{ type: "folder", value: "folder", icon: "folder" },
-				{ type: "file", value: "file", icon: "file" },
-			]
+			return [{ type: "noResults", value: "noResults", icon: "info" }]
 		}
 	}
 }