Reproduction steps

1. Right click on the dock with the project file tree.
2. Create a new file foo/bar/baz/a.txt (this shows a compressed single-line path)
3. Try creating a file by right clicking on foo or bar
4. notice that file is always created in baz as a sibling of a.txt no matter which ancestor folder you clicked on

Current vs. Expected behavior

Current behavior:

Expected behavior:
Highlight with border/shadow/underline/box or some other means the folder under the cursor and create the file there.

Zed version and system specs

Zed: v0.218.3+preview.104.4adf4c6c1dc3cad2cb35273ee707812c6874ac3b (Zed Preview)
OS: macOS 26.2
Memory: 16 GiB
Architecture: aarch64

Attach Zed log file

Relevant Zed settings

Relevant Keymap

(for AI issues) Model provider details

No response

If you are using WSL on Windows, what flavor of Linux are you using?

None