fix(cli): tolerate unsafe project config in settings overlay

KilocodeConfigOverlay.load() propagated InvalidError from untrusted {env:}/out-of-scope {file:} substitutions through Promise.all, breaking the whole /config/overlay instead of skipping the offending file. Skip failed files (log + return {}) so the settings overlay still shows remaining config, matching the main config loader's degrade-gracefully behavior.

packages/opencode/src/kilocode/config/overlay.ts

@@ -2,6 +2,7 @@ import path from "path"
 import { existsSync } from "fs"
 import { Schema } from "effect"
 import z from "zod"
+import * as Log from "@opencode-ai/core/util/log"
 import { Global } from "@opencode-ai/core/global"
 import { ConfigAgent } from "@/config/agent"
 import { Config } from "@/config/config"
@@ -13,6 +14,8 @@ import { KilocodeConfig } from "./config"
 import { KilocodeConfigSources } from "./sources"
 
 export namespace KilocodeConfigOverlay {
+  const log = Log.create({ service: "kilocode.config.overlay" })
+
   export const Scope = z.enum(["global", "project"])
   export type Scope = z.infer<typeof Scope>
 
@@ -204,6 +207,17 @@ export namespace KilocodeConfigOverlay {
   // kilocode_change end
 
   async function load(file: string, fileScope?: ConfigVariable.FileScope): Promise<Config.Info> {
+    // kilocode_change start - a single unsafe/invalid project config file must not break the settings overlay;
+    // untrusted {env:} and out-of-scope {file:} throw InvalidError here, so skip the offending file like the
+    // main config loader does rather than failing the whole overlay.
+    return await loadUnsafe(file, fileScope).catch((err) => {
+      log.warn("skipping unreadable project config in overlay", { file, err })
+      return {} as Config.Info
+    })
+  }
+
+  async function loadUnsafe(file: string, fileScope?: ConfigVariable.FileScope): Promise<Config.Info> {
+    // kilocode_change end
     const text = await Bun.file(file).text()
     // kilocode_change - overlay reads project config files: {env:} rejected, {file:} confined to fileScope.root
     const expanded = await ConfigVariable.substitute({ text, type: "path", path: file, trusted: false, fileScope })

packages/opencode/test/kilocode/server/config-overlay.test.ts

@@ -144,6 +144,26 @@ describe("config overlay routes", () => {
     expect(body.targets.project).toBe(path.join(project.path, ".kilo", "kilo.json"))
   })
 
+  test.serial("tolerates unsafe project config instead of failing the overlay", async () => {
+    await using project = await tmpdir()
+    // A project config that references a file outside the project root throws during substitution.
+    // The overlay must skip it and still resolve, rather than rejecting the whole request.
+    await Filesystem.write(
+      path.join(project.path, ".kilo", "kilo.json"),
+      JSON.stringify({ username: "{file:/etc/passwd}" }),
+    )
+
+    const body = await KilocodeConfigOverlay.resolve({
+      directory: project.path,
+      scope: "project",
+      effective: {},
+      global: {},
+      sources: [],
+    })
+
+    expect(body.project.username ?? "").not.toContain("root:")
+  })
+
   test.serial("marks global values inherited in project scope", async () => {
     await using global = await tmpdir()
     await using project = await tmpdir()