[azure.ai.agents] Fix init from manifest in CWD: allow copy when target is subpath

[v1212]

Fixes #8523

Problem

When running azd ai agent init from a directory that contains an agent.manifest.yaml but no azure.yaml in the directory tree (e.g. inside a sample repo like foundry-samples/.../01-basic/), the from-manifest flow fails with:

cannot copy agent files: target is inside the manifest directory

The auto-detect flow finds the manifest, guides the user through setup, then ensureProject creates a project subdirectory under CWD. The subsequent copy step detects that the target is inside the manifest directory and rejects.

azd ai agent init - All Cases

#	CWD State	Manifest	azure.yaml	Path Taken	ensureProject Behavior	Result
1	Empty dir	None	None	Template (user picks)	azd init -t template creates subdirectory	OK
2	Has code	None	None	From-code	scaffoldTemplate downloads azure.yaml + infra into CWD (no subdir)	OK
3	Has code	Yes	Yes (parent)	From-manifest	Finds existing project, no subdir, no copy needed	OK
4	Has code	Yes	None	From-manifest	azd init -t starter creates subdirectory then copy	BUG
5	Has code	None	Yes (parent)	From-code	Finds existing project, generates agent.yaml in-place	OK
6	Empty dir	None	Yes	Template adds to existing project	N/A	OK
7	Has code	Yes (via -m url)	None	From-manifest (remote)	Downloads to temp, no subpath issue	OK
8	Has code	Yes (via -m ../path)	None	From-manifest (external)	manifestDir separate from project dir	OK

Only Case 4 triggers the bug - manifest auto-detected in CWD + no azure.yaml = ensureProject creates subdirectory under manifestDir.

Root Cause

The from-manifest ensureProject uses azd init -t template subdir which creates a new directory. The from-code ensureProject uses scaffoldTemplate which downloads only infra/ + azure.yaml into CWD without a subdirectory. When the manifest is auto-detected in CWD, the from-manifest path creates the project as a child of the manifest directory, making copy impossible without recursion.

Fix

1. validateLocalContainerAgentCopy: Allow the subpath case (return nil instead of error)
2. copyDirectory: When dst is inside src, skip the destination directory during filepath.WalkDir traversal using filepath.SkipDir, preventing infinite recursion while copying all other source files

Testing

• Renamed TestCopyDirectory_RefusesToCopyIntoSubtree to TestCopyDirectory_CopiesWithSubpathExclusion
• Added TestValidateLocalContainerAgentCopy_AllowsSubpath
• Updated init_copy_test.go subpath test to verify new behavior
• All existing tests pass

Repro Steps

git clone https://github.com/azure-samples/foundry-samples
cd foundry-samples/samples/python/hosted-agents/agent-framework/responses/01-basic/
azd ai agent init
# Select 'Yes' when prompted about detected manifest
# Enter agent name
# Error: cannot copy agent files: target is inside the manifest directory

Workaround (older versions)

cd ..
azd ai agent init -m ./01-basic/agent.manifest.yaml

[Copilot]

Pull request overview

Fixes a bug where azd ai agent init failed with "target is inside the manifest directory" when run in a directory that contains an agent.manifest.yaml but no azure.yaml. In that flow, ensureProject creates a project subdirectory under CWD (the manifest dir), and the previous validation/copy logic refused to copy a directory into its own subtree. The fix permits this case and prevents infinite recursion by skipping the destination subtree during the walk.

Changes:

• validateLocalContainerAgentCopy now returns nil (instead of an error) when the target is a subpath of the manifest directory.
• copyDirectory allows dst-inside-src and uses filepath.SkipDir to avoid recursing into the destination.
• Renamed/expanded existing test and added TestValidateLocalContainerAgentCopy_AllowsSubpath.

Reviewed changes

Copilot reviewed 2 out of 2 changed files in this pull request and generated no comments.

File	Description
cli/azd/extensions/azure.ai.agents/internal/cmd/init_copy.go	Allow subpath copy and skip destination directory during walk
cli/azd/extensions/azure.ai.agents/internal/cmd/init_test.go	Update copy test to verify subpath exclusion behavior; add validation test for subpath case

[github-actions]

📋 Prioritization Note

Thanks for the contribution! The linked issue isn't in the current milestone yet.
Review may take a bit longer — reach out to @rajeshkamal5050 or @kristenwomack if you'd like to discuss prioritization.

[banrahan]

I changed how this was implemented, I undid the changes to init_copy, it was re-creating everything as a sub-dir. Instead I added a check for a local manifest in init.go and refactored the isLocalFilePath so I could use it at this point.