diff --git a/apps/server/agent/cleanup-manager.ts b/apps/server/agent/cleanup-manager.ts
index e35d406..17586ac 100644
--- a/apps/server/agent/cleanup-manager.ts
+++ b/apps/server/agent/cleanup-manager.ts
@@ -8,7 +8,7 @@
 import { promisify } from 'node:util';
 import { execFile } from 'node:child_process';
 import { readFile, readdir, rm, cp, mkdir } from 'node:fs/promises';
-import { existsSync } from 'node:fs';
+import { existsSync, readdirSync } from 'node:fs';
 import { join } from 'node:path';
 import type { AgentRepository } from '../db/repositories/agent-repository.js';
 import type { ProjectRepository } from '../db/repositories/project-repository.js';
@@ -49,10 +49,35 @@ export class CleanupManager {
    */
   private resolveAgentCwd(worktreeId: string): string {
     const base = this.getAgentWorkdir(worktreeId);
+
+    // Fast path: .cw/output exists at the base level
+    if (existsSync(join(base, '.cw', 'output'))) {
+      return base;
+    }
+
+    // Standalone agents use a workspace/ subdirectory
     const workspaceSub = join(base, 'workspace');
-    if (!existsSync(join(base, '.cw', 'output')) && existsSync(join(workspaceSub, '.cw'))) {
+    if (existsSync(join(workspaceSub, '.cw'))) {
       return workspaceSub;
     }
+
+    // Initiative-based agents may have written .cw/ inside a project
+    // subdirectory (e.g. agent-workdirs/<name>/codewalk-district/.cw/).
+    // Probe immediate children for a .cw/output directory.
+    try {
+      const entries = readdirSync(base, { withFileTypes: true });
+      for (const entry of entries) {
+        if (entry.isDirectory() && entry.name !== '.cw') {
+          const projectSub = join(base, entry.name);
+          if (existsSync(join(projectSub, '.cw', 'output'))) {
+            return projectSub;
+          }
+        }
+      }
+    } catch {
+      // base dir may not exist
+    }
+
     return base;
   }
 
diff --git a/apps/server/agent/manager.ts b/apps/server/agent/manager.ts
index 0572edb..d567fcc 100644
--- a/apps/server/agent/manager.ts
+++ b/apps/server/agent/manager.ts
@@ -43,7 +43,7 @@ import { getProvider } from './providers/registry.js';
 import { createModuleLogger } from '../logger/index.js';
 import { getProjectCloneDir } from '../git/project-clones.js';
 import { join } from 'node:path';
-import { unlink, readFile, writeFile as writeFileAsync } from 'node:fs/promises';
+import { unlink, readFile, writeFile as writeFileAsync, mkdir } from 'node:fs/promises';
 import { existsSync } from 'node:fs';
 import type { AccountCredentialManager } from './credentials/types.js';
 import { ProcessManager } from './process-manager.js';
@@ -332,32 +332,10 @@ export class MultiProviderAgentManager implements AgentManager {
 
     await this.repository.update(agentId, { pid, outputFilePath });
 
-    // Write spawn diagnostic file for post-execution verification
-    const diagnostic = {
-      timestamp: new Date().toISOString(),
-      agentId,
-      alias,
-      intendedCwd: finalCwd,
-      worktreeId: agent.worktreeId,
-      provider: providerName,
-      command,
-      args,
-      env: processEnv,
-      cwdExistsAtSpawn: existsSync(finalCwd),
-      initiativeId: initiativeId || null,
-      customCwdProvided: !!cwd,
-      accountId: accountId || null,
-    };
-
-    await writeFileAsync(
-      join(finalCwd, '.cw', 'spawn-diagnostic.json'),
-      JSON.stringify(diagnostic, null, 2),
-      'utf-8'
-    );
-
+    // Register agent and start polling BEFORE non-critical I/O so that a
+    // diagnostic-write failure can never orphan a running process.
     const activeEntry: ActiveAgent = { agentId, pid, tailer, outputFilePath, agentCwd: finalCwd };
     this.activeAgents.set(agentId, activeEntry);
-    log.info({ agentId, alias, pid, diagnosticWritten: true }, 'detached subprocess started with diagnostic');
 
     // Emit spawned event
     if (this.eventBus) {
@@ -377,6 +355,37 @@ export class MultiProviderAgentManager implements AgentManager {
     );
     activeEntry.cancelPoll = cancel;
 
+    // Write spawn diagnostic file (non-fatal — .cw/ may not exist yet for
+    // agents spawned without inputContext, e.g. conflict-resolution agents)
+    try {
+      const diagnosticDir = join(finalCwd, '.cw');
+      await mkdir(diagnosticDir, { recursive: true });
+      const diagnostic = {
+        timestamp: new Date().toISOString(),
+        agentId,
+        alias,
+        intendedCwd: finalCwd,
+        worktreeId: agent.worktreeId,
+        provider: providerName,
+        command,
+        args,
+        env: processEnv,
+        cwdExistsAtSpawn: existsSync(finalCwd),
+        initiativeId: initiativeId || null,
+        customCwdProvided: !!cwd,
+        accountId: accountId || null,
+      };
+      await writeFileAsync(
+        join(diagnosticDir, 'spawn-diagnostic.json'),
+        JSON.stringify(diagnostic, null, 2),
+        'utf-8'
+      );
+    } catch (err) {
+      log.warn({ agentId, alias, err: err instanceof Error ? err.message : String(err) }, 'failed to write spawn diagnostic');
+    }
+
+    log.info({ agentId, alias, pid }, 'detached subprocess started');
+
     return this.toAgentInfo(agent);
   }
 
diff --git a/apps/server/agent/output-handler.ts b/apps/server/agent/output-handler.ts
index a43f09e..28fdaf6 100644
--- a/apps/server/agent/output-handler.ts
+++ b/apps/server/agent/output-handler.ts
@@ -7,7 +7,7 @@
  */
 
 import { readFile } from 'node:fs/promises';
-import { existsSync } from 'node:fs';
+import { existsSync, readdirSync } from 'node:fs';
 import { join } from 'node:path';
 import type { AgentRepository } from '../db/repositories/agent-repository.js';
 import type { ChangeSetRepository, CreateChangeSetEntryData } from '../db/repositories/change-set-repository.js';
@@ -233,10 +233,10 @@ export class OutputHandler {
 
       log.debug({ agentId }, 'detached agent completed');
 
-      // Resolve actual agent working directory — standalone agents run in a
-      // "workspace/" subdirectory inside getAgentWorkdir, so prefer agentCwd
-      // recorded at spawn time when available.
-      const agentWorkdir = active?.agentCwd ?? getAgentWorkdir(agent.worktreeId);
+      // Resolve actual agent working directory.
+      // The recorded agentCwd may be the parent dir (agent-workdirs/<name>/) while
+      // the agent actually writes .cw/output/ inside a project subdirectory.
+      const agentWorkdir = this.resolveAgentWorkdir(active?.agentCwd ?? getAgentWorkdir(agent.worktreeId));
       const outputDir = join(agentWorkdir, '.cw', 'output');
       const expectedPwdFile = join(agentWorkdir, '.cw', 'expected-pwd.txt');
       const diagnosticFile = join(agentWorkdir, '.cw', 'spawn-diagnostic.json');
@@ -1158,6 +1158,31 @@ export class OutputHandler {
     }
   }
 
+  /**
+   * Resolve the actual agent working directory. The recorded agentCwd may be
+   * the parent (agent-workdirs/<name>/) but .cw/output/ could be inside a
+   * project subdirectory (e.g. codewalk-district/.cw/output/).
+   */
+  private resolveAgentWorkdir(base: string): string {
+    if (existsSync(join(base, '.cw', 'output'))) return base;
+
+    // Standalone agents: workspace/ subdirectory
+    const workspaceSub = join(base, 'workspace');
+    if (existsSync(join(workspaceSub, '.cw'))) return workspaceSub;
+
+    // Initiative-based agents: probe project subdirectories
+    try {
+      for (const entry of readdirSync(base, { withFileTypes: true })) {
+        if (entry.isDirectory() && entry.name !== '.cw') {
+          const sub = join(base, entry.name);
+          if (existsSync(join(sub, '.cw', 'output'))) return sub;
+        }
+      }
+    } catch { /* base may not exist */ }
+
+    return base;
+  }
+
   private emitCrashed(agent: { id: string; name: string; taskId: string | null }, error: string): void {
     if (this.eventBus) {
       const event: AgentCrashedEvent = {