diff --git a/sim/app/w/components/sidebar/components/folder-section/folder-section.tsx b/sim/app/w/components/sidebar/components/folder-section/folder-section.tsx
deleted file mode 100644
index 56c143bf0c..0000000000
--- a/sim/app/w/components/sidebar/components/folder-section/folder-section.tsx
+++ /dev/null
@@ -1,126 +0,0 @@
-'use client'
-
-import { useEffect, useState } from 'react'
-import { usePathname } from 'next/navigation'
-import { Folder, LucideIcon } from 'lucide-react'
-import { Button } from '@/components/ui/button'
-import { Tooltip, TooltipContent, TooltipTrigger } from '@/components/ui/tooltip'
-import { WorkflowMetadata } from '@/stores/workflows/registry/types'
-import { NavItem } from '../nav-item/nav-item'
-
-interface FolderSectionProps {
-  title: string
-  workflows: WorkflowMetadata[]
-  defaultOpen?: boolean
-  icon?: LucideIcon
-}
-
-export function FolderSection({
-  title,
-  workflows,
-  defaultOpen = true,
-  icon: Icon = Folder,
-}: FolderSectionProps) {
-  const [isOpen, setIsOpen] = useState(defaultOpen)
-  const pathname = usePathname()
-
-  // Auto-expand the folder if the current path is one of the workflows inside it
-  useEffect(() => {
-    const isCurrentPathInThisFolder = workflows.some((workflow) => pathname === `/w/${workflow.id}`)
-    if (isCurrentPathInThisFolder) {
-      setIsOpen(true)
-    }
-  }, [pathname, workflows])
-
-  if (workflows.length === 0) {
-    return null
-  }
-
-  // Calculate height based on number of workflows, with a maximum of 4
-  const navItemHeight = 32 // Height of each NavItem in pixels
-  const gapSize = 12 // Gap between items (3 in rem units = ~12px)
-  const maxItems = 4
-
-  // Calculate height for a single item (no gaps)
-  const singleItemHeight = navItemHeight
-
-  // Calculate heights for different number of items
-  const twoItemsHeight = navItemHeight * 2 + gapSize
-  const threeItemsHeight = navItemHeight * 3 + gapSize * 2
-  const fourItemsHeight = navItemHeight * 4 + gapSize * 3
-
-  // Max height is always the height of 4 items
-  const maxHeight = fourItemsHeight
-  const needsScroll = workflows.length > maxItems
-
-  // Get exact height based on number of workflows (up to 4)
-  const getExactHeight = () => {
-    switch (Math.min(workflows.length, maxItems)) {
-      case 1:
-        return singleItemHeight
-      case 2:
-        return twoItemsHeight
-      case 3:
-        return threeItemsHeight
-      case 4:
-        return fourItemsHeight
-      default:
-        return 'auto'
-    }
-  }
-
-  return (
-    <div className="flex flex-col items-center w-full">
-      <Tooltip>
-        <TooltipTrigger asChild>
-          <Button
-            variant="ghost"
-            size="icon"
-            onClick={() => setIsOpen(!isOpen)}
-            className={`flex !h-9 !w-9 items-center justify-center rounded-lg text-muted-foreground transition-colors hover:text-foreground md:h-8 md:w-8 ${
-              isOpen ? 'bg-accent' : ''
-            }`}
-          >
-            <Icon className="!h-5 !w-5" />
-            <span className="sr-only">{title}</span>
-          </Button>
-        </TooltipTrigger>
-        <TooltipContent side="right">{title}</TooltipContent>
-      </Tooltip>
-
-      {isOpen && (
-        <div className="mt-3 flex flex-col items-center w-full">
-          <div
-            className={`flex flex-col items-center w-full ${
-              needsScroll ? 'overflow-y-auto [&::-webkit-scrollbar]:hidden' : ''
-            }`}
-            style={{
-              height: workflows.length <= maxItems ? `${getExactHeight()}px` : `${maxHeight}px`,
-              minHeight: workflows.length === 1 ? `${singleItemHeight}px` : undefined,
-              maxHeight: `${maxHeight}px`,
-              scrollbarWidth: 'none',
-              msOverflowStyle: 'none',
-            }}
-          >
-            <ul className="flex flex-col items-center gap-3 w-full">
-              {workflows.map((workflow) => (
-                <li key={workflow.id} className="flex justify-center w-full h-8 flex-shrink-0">
-                  <NavItem href={`/w/${workflow.id}`} label={workflow.name}>
-                    <div
-                      className="h-4 w-4 rounded-full flex-shrink-0"
-                      style={{
-                        backgroundColor:
-                          workflow.color ||
-                          (workflow.marketplaceData?.status === 'temp' ? '#808080' : '#3972F6'),
-                      }}
-                    />
-                  </NavItem>
-                </li>
-              ))}
-            </ul>
-          </div>
-        </div>
-      )}
-    </div>
-  )
-}
diff --git a/sim/app/w/components/sidebar/components/workflow-folders/workflow-folders.tsx b/sim/app/w/components/sidebar/components/workflow-folders/workflow-folders.tsx
new file mode 100644
index 0000000000..c14c5ce5d4
--- /dev/null
+++ b/sim/app/w/components/sidebar/components/workflow-folders/workflow-folders.tsx
@@ -0,0 +1,138 @@
+'use client'
+
+import { useEffect, useState } from 'react'
+import { usePathname } from 'next/navigation'
+import { Folder, LucideIcon, Store } from 'lucide-react'
+import { Button } from '@/components/ui/button'
+import { Tooltip, TooltipContent, TooltipTrigger } from '@/components/ui/tooltip'
+import { WorkflowMetadata } from '@/stores/workflows/registry/types'
+import { NavItem } from '../nav-item/nav-item'
+
+interface WorkflowFolderProps {
+  title: string
+  workflows: WorkflowMetadata[]
+  defaultOpen?: boolean
+  icon?: LucideIcon
+  maxItems?: number
+  hasMarketplace?: boolean
+}
+
+interface WorkflowFoldersProps {
+  regularWorkflows: WorkflowMetadata[]
+  marketplaceWorkflows: WorkflowMetadata[]
+}
+
+/**
+ * WorkflowFolder component for rendering a collapsible group of workflows
+ */
+function WorkflowFolder({
+  title,
+  workflows,
+  defaultOpen = true,
+  icon: Icon = Folder,
+  maxItems,
+  hasMarketplace = false,
+}: WorkflowFolderProps) {
+  const [isOpen, setIsOpen] = useState(defaultOpen)
+  const pathname = usePathname()
+
+  // Auto-expand the folder if the current path is one of the workflows inside it
+  useEffect(() => {
+    const isCurrentPathInThisFolder = workflows.some((workflow) => pathname === `/w/${workflow.id}`)
+    if (isCurrentPathInThisFolder) {
+      setIsOpen(true)
+    }
+  }, [pathname, workflows])
+
+  if (workflows.length === 0) {
+    return null
+  }
+
+  // Filter workflows if maxItems is specified
+  const displayedWorkflows = maxItems ? workflows.slice(0, maxItems) : workflows
+
+  return (
+    <div className="flex flex-col items-center w-full">
+      {/* Folder Button - This stays fixed */}
+      <Tooltip>
+        <TooltipTrigger asChild>
+          <Button
+            variant="ghost"
+            size="icon"
+            onClick={() => setIsOpen(!isOpen)}
+            className={`flex !h-9 !w-9 items-center justify-center rounded-lg text-muted-foreground transition-colors hover:text-foreground md:h-8 md:w-8 ${
+              isOpen ? 'bg-accent' : ''
+            }`}
+          >
+            <Icon className="!h-5 !w-5" />
+            <span className="sr-only">{title}</span>
+          </Button>
+        </TooltipTrigger>
+        <TooltipContent side="right">{title}</TooltipContent>
+      </Tooltip>
+
+      {/* Workflow items with separate scrollable container */}
+      {isOpen && (
+        <div className="mt-3 w-full flex items-center flex-col">
+          <div
+            className={`w-full flex flex-col items-center gap-3 ${hasMarketplace ? 'max-h-[calc(240px+0.5rem)] overflow-y-auto pb-2 scrollbar-none' : ''}`}
+          >
+            {displayedWorkflows.map((workflow) => (
+              <li key={workflow.id} className="flex justify-center w-full h-8 flex-shrink-0">
+                <NavItem key={workflow.id} href={`/w/${workflow.id}`} label={workflow.name}>
+                  <div
+                    className="h-4 w-4 rounded-full flex-shrink-0"
+                    style={{
+                      backgroundColor:
+                        workflow.color ||
+                        (workflow.marketplaceData?.status === 'temp' ? '#808080' : '#3972F6'),
+                    }}
+                  />
+                </NavItem>
+              </li>
+            ))}
+          </div>
+        </div>
+      )}
+    </div>
+  )
+}
+
+/**
+ * WorkflowFolders - main component for sidebar workflow organization
+ * Handles both regular and marketplace workflows in a single unified component
+ */
+export function WorkflowFolders({ regularWorkflows, marketplaceWorkflows }: WorkflowFoldersProps) {
+  const hasMarketplace = marketplaceWorkflows.length > 0
+
+  // Limit regular workflows to 7 when marketplace workflows exist
+  const maxRegularWorkflows = hasMarketplace ? 7 : undefined
+
+  return (
+    <div className="flex flex-col w-full space-y-6">
+      {/* Regular Workflows Section */}
+      <div>
+        <WorkflowFolder
+          title="My Workflows"
+          workflows={regularWorkflows}
+          defaultOpen={true}
+          maxItems={maxRegularWorkflows}
+          hasMarketplace={hasMarketplace}
+        />
+      </div>
+
+      {/* Marketplace Workflows Section - Only when marketplace workflows exist */}
+      {hasMarketplace && (
+        <div>
+          <WorkflowFolder
+            title="Marketplace"
+            workflows={marketplaceWorkflows}
+            defaultOpen={true}
+            icon={Store}
+            hasMarketplace={true}
+          />
+        </div>
+      )}
+    </div>
+  )
+}
diff --git a/sim/app/w/components/sidebar/sidebar.tsx b/sim/app/w/components/sidebar/sidebar.tsx
index dca2e39bbc..bf1ad5e5b3 100644
--- a/sim/app/w/components/sidebar/sidebar.tsx
+++ b/sim/app/w/components/sidebar/sidebar.tsx
@@ -10,10 +10,10 @@ import { Button } from '@/components/ui/button'
 import { Tooltip, TooltipContent, TooltipTrigger } from '@/components/ui/tooltip'
 import { useWorkflowRegistry } from '@/stores/workflows/registry/store'
 import { WorkflowMetadata } from '@/stores/workflows/registry/types'
-import { FolderSection } from './components/folder-section/folder-section'
 import { HelpModal } from './components/help-modal/help-modal'
 import { NavItem } from './components/nav-item/nav-item'
 import { SettingsModal } from './components/settings-modal/settings-modal'
+import { WorkflowFolders } from './components/workflow-folders/workflow-folders'
 
 export function Sidebar() {
   const { workflows, createWorkflow } = useWorkflowRegistry()
@@ -85,7 +85,8 @@ export function Sidebar() {
 
   return (
     <aside className="fixed inset-y-0 left-0 z-10 hidden w-14 flex-col border-r bg-background sm:flex">
-      <nav className="flex flex-col items-center gap-4 px-2 py-5">
+      {/* Top navigation - Logo and Add button */}
+      <nav className="flex-shrink-0 flex flex-col items-center gap-4 px-2 py-5">
         {/* Sim Studio Logo */}
         <Link
           href="/w/1"
@@ -112,23 +113,18 @@ export function Sidebar() {
         </Tooltip>
       </nav>
 
-      {/* Scrollable workflows section */}
-      <nav className="flex-1 overflow-y-auto px-2 [&::-webkit-scrollbar]:hidden [-ms-overflow-style:'none'] [scrollbar-width:'none']">
-        <div className="flex flex-col items-center gap-4">
-          {/* My Workflows folder */}
-          <FolderSection title="My Workflows" workflows={regularWorkflows} defaultOpen={true} />
-
-          {/* Marketplace Workflows folder */}
-          <FolderSection
-            title="Marketplace"
-            workflows={tempWorkflows}
-            defaultOpen={true}
-            icon={Store}
+      {/* Workflow sections - This area scrolls */}
+      <div className="flex-1 overflow-y-auto px-2 scrollbar-none">
+        <div className="pb-2">
+          <WorkflowFolders
+            regularWorkflows={regularWorkflows}
+            marketplaceWorkflows={tempWorkflows}
           />
         </div>
-      </nav>
+      </div>
 
-      <nav className="flex flex-col items-center gap-4 px-2 py-[18px]">
+      {/* Bottom navigation - Always visible */}
+      <nav className="flex-shrink-0 flex flex-col items-center gap-4 px-2 py-[18px]">
         {/* Marketplace */}
         <Tooltip>
           <TooltipTrigger asChild>