Bug Description

When using extraKnownMarketplaces with "source": "directory" and an absolute path, the marketplace is not discovered. Switching to a relative path (resolved from the project root) makes it work. There is no error message — it silently fails.

Steps to Reproduce

1. Create a local marketplace directory at ~/.claude/marketplace/ with a valid .claude-plugin/marketplace.json
2. Add to .claude/settings.json (project level):

{
  "extraKnownMarketplaces": {
    "my-marketplace": {
      "source": {
        "source": "directory",
        "path": "/home/user/.claude/marketplace"
      }
    }
  }
}

3. Restart Claude Code
4. The marketplace is not discovered — no trust dialog, no plugin available

Expected Behavior

The marketplace should be discovered using the absolute path, as documented in the Settings documentation:

{ "source": "directory", "path": "/usr/local/share/claude/acme-plugins" }

Workaround

Use a relative path from the project root instead. If the marketplace files live outside the project, create a symlink:

ln -s ~/.claude/marketplace .claude/marketplace

Then use:

{
  "extraKnownMarketplaces": {
    "my-marketplace": {
      "source": {
        "source": "directory",
        "path": "./.claude/marketplace"
      }
    }
  }
}

This works correctly.

Additional Context

• Tested on Claude Code running on Linux (Ubuntu)
• The same marketplace files work when referenced via relative path
• Possibly related to Bug: Plugin path resolution uses marketplace.json file path instead of marketplace directory #11278 (path resolution bug with marketplace.json file paths)
• Also noted that extraKnownMarketplaces in user settings (~/.claude/settings.json) does not trigger marketplace discovery at all, despite the docs listing User scope as supported. The trust dialog only fires for project-level entries. This is tracked in [BUG] extraKnownMarketplaces in managed-settings.json is ignored #16870 for managed settings but also applies to user settings.