diff --git a/src/compiler/resolutionCache.ts b/src/compiler/resolutionCache.ts
index 0f732bad2c6..73b0a921210 100644
--- a/src/compiler/resolutionCache.ts
+++ b/src/compiler/resolutionCache.ts
@@ -123,6 +123,7 @@ export interface ResolutionCache extends Required<CompilerHostSupportingResoluti
         resolution: T,
         filePath: Path,
         getResolutionWithResolvedFileName: GetResolutionWithResolvedFileName<T, R>,
+        redirectedReference: ResolvedProjectReference | undefined,
     ): void;
 
     resolveModuleNameLiterals(
@@ -180,6 +181,14 @@ export interface ResolutionCache extends Required<CompilerHostSupportingResoluti
     onChangesAffectModuleResolution(): void;
 }
 
+/** @internal */
+export interface RootDirInfo {
+    rootDir: string;
+    rootPath: Path;
+    rootPathComponents: Readonly<PathPathComponents>;
+    canWatch: boolean;
+}
+
 /** @internal */
 export interface WatchedResolutionWithFailedLookupLocations {
     isInvalidated?: boolean;
@@ -188,6 +197,7 @@ export interface WatchedResolutionWithFailedLookupLocations {
     watchedFailed?: number;
     watchedAffected?: number;
     setAtRoot?: boolean;
+    rootDirInfo?: RootDirInfo;
 }
 
 /** @internal */
@@ -698,10 +708,8 @@ export function createResolutionCache(
     let potentiallyUnwatchedPackageJsons: Set<Path> | undefined;
     const directoryWatchesOfFailedLookups = new Map<Path, DirectoryWatchesOfFailedLookup>();
     const fileWatchesOfAffectingLocations = new Map<string, FileWatcherOfAffectingLocation>();
-    const rootDir = getRootDirectoryOfResolutionCache(rootDirForResolution, getCurrentDirectory);
-    const rootPath = resolutionHost.toPath(rootDir);
-    const rootPathComponents = getPathComponents(rootPath);
-    const isRootWatchable = canWatchDirectoryOrFile(rootPathComponents);
+    const rootDirInfo = getRootDirInfo(rootDirForResolution);
+    const redirectsToRootDirInfo = new Map<ResolvedProjectReference, RootDirInfo>();
 
     const isSymlinkCache = new Map<Path, boolean>();
     const packageDirWatchers = new Map<Path, PackageDirWatcher>(); // Watching packageDir if symlink otherwise watching dirPath
@@ -756,11 +764,46 @@ export function createResolutionCache(
         onChangesAffectModuleResolution,
     };
 
+    function getRootDirInfo(rootDirForResolution: string): RootDirInfo {
+        const rootDir = getRootDirectoryOfResolutionCache(rootDirForResolution, getCurrentDirectory);
+        const rootPath = resolutionHost.toPath(rootDir);
+        const rootPathComponents = getPathComponents(rootPath);
+        return {
+            rootDir,
+            rootPath,
+            rootPathComponents,
+            canWatch: canWatchDirectoryOrFile(rootPathComponents),
+        };
+    }
+
+    function getRootDirInfoOfRedirectedReference(redirectedReference: ResolvedProjectReference | undefined): RootDirInfo {
+        if (!redirectedReference) return rootDirInfo;
+        let result = redirectsToRootDirInfo.get(redirectedReference);
+        if (!result) {
+            redirectsToRootDirInfo.set(
+                redirectedReference,
+                result = getRootDirInfo(
+                    getDirectoryPath(redirectedReference.sourceFile.fileName),
+                ),
+            );
+        }
+        return result;
+    }
+
+    function cleanupRedirectRootDirInfo(newProgram: Program | undefined) {
+        const toDeleteRedirectToRootDirInfo = new Set(redirectsToRootDirInfo.keys());
+        newProgram?.forEachResolvedProjectReference(redirect => {
+            toDeleteRedirectToRootDirInfo.delete(redirect);
+        });
+        toDeleteRedirectToRootDirInfo.forEach(redirect => redirectsToRootDirInfo.delete(redirect));
+    }
+
     function clear() {
         potentiallyUnreferencedResolutions = undefined;
         potentiallyUnreferencedDirWatchers = undefined;
         potentiallyUnwatchedPackageJsons = undefined;
         newUnresolvedResolutionCachePassResolutions = undefined;
+        redirectsToRootDirInfo.clear();
         clearMap(directoryWatchesOfFailedLookups, closeFileWatcherOf);
         clearMap(fileWatchesOfAffectingLocations, closeFileWatcherOf);
         packageJsonRefCount.clear();
@@ -881,6 +924,7 @@ export function createResolutionCache(
                     impliedFormatPackageJsons.delete(path);
                 }
             });
+            cleanupRedirectRootDirInfo(newProgram);
         }
         potentiallyUnReferencedFileWatcherOfAffectingLocation?.forEach(closeFileWatcherOfAffectingLocation);
         potentiallyUnReferencedFileWatcherOfAffectingLocation = undefined;
@@ -1071,7 +1115,7 @@ export function createResolutionCache(
                 }
                 resolutionsInFile.set(name, mode, resolution);
                 if (resolution !== existingResolution) {
-                    watchResolution(resolution, path, getResolutionWithResolvedFileName);
+                    watchResolution(resolution, path, getResolutionWithResolvedFileName, redirectedReference);
                     if (existingResolution) {
                         stopWatchFailedLookupLocationOfResolution(existingResolution, path, moduleOrTypeRefCache);
                     }
@@ -1275,7 +1319,7 @@ export function createResolutionCache(
             const existingResolution = resolution;
             resolution = ts_resolveLibrary(libraryName, resolveFrom, options, host, libraryResolutionCache);
             const path = resolutionHost.toPath(resolveFrom);
-            watchResolution(resolution, path, getResolvedModuleFromResolution);
+            watchResolution(resolution, path, getResolvedModuleFromResolution, /*redirectedReference*/ undefined);
             resolvedLibraries.set(libFileName, resolution);
             if (existingResolution) {
                 stopWatchFailedLookupLocationOfResolution(existingResolution, path, libraryResolutionCache);
@@ -1328,10 +1372,11 @@ export function createResolutionCache(
         resolution: T,
         filePath: Path,
         getResolutionWithResolvedFileName: GetResolutionWithResolvedFileName<T, R>,
+        redirectedReference: ResolvedProjectReference | undefined,
     ) {
         const firstTime = !resolution.files;
         (resolution.files ??= new Set()).add(filePath);
-        watchFailedLookupLocationOfResolution(resolution);
+        watchFailedLookupLocationOfResolution(resolution, redirectedReference);
         watchAffectingLocationsOfResolution(resolution);
         if (!firstTime) return;
         if (resolution.globalCacheResolution && !resolution.globalCacheResolution.resolution.resolvedModule) {
@@ -1361,7 +1406,10 @@ export function createResolutionCache(
         (potentiallyUnwatchedPackageJsons ??= new Set()).add(resolutionHost.toPath(location));
     }
 
-    function watchFailedLookupLocation(failedLookupLocation: string) {
+    function watchFailedLookupLocation(
+        failedLookupLocation: string,
+        { rootDir, rootPath, rootPathComponents, canWatch }: RootDirInfo,
+    ) {
         const failedLookupLocationPath = resolutionHost.toPath(failedLookupLocation);
         if (endsWith(failedLookupLocationPath, "/package.json")) addRefToPackageJson(failedLookupLocationPath);
         const toWatch = getDirectoryToWatchFailedLookupLocation(
@@ -1370,7 +1418,7 @@ export function createResolutionCache(
             rootDir,
             rootPath,
             rootPathComponents,
-            isRootWatchable,
+            canWatch,
             getCurrentDirectory,
             resolutionHost.preferNonRecursiveWatch,
         );
@@ -1386,9 +1434,11 @@ export function createResolutionCache(
         }
     }
 
-    function watchFailedLookupLocationOfResolution(resolution: ResolutionWithFailedLookupLocations) {
+    function watchFailedLookupLocationOfResolution(
+        resolution: ResolutionWithFailedLookupLocations,
+        redirectedReference: ResolvedProjectReference | undefined,
+    ) {
         Debug.assert(!!resolution.files?.size);
-
         const { failedLookupLocations, alternateResult, watchedFailed } = resolution;
         // There have to be failed lookup locations if there is alternateResult so storing failedLookupLocation length is good enough,
         // alternateResult doesnt change later only failed lookup locations get added on
@@ -1400,17 +1450,38 @@ export function createResolutionCache(
 
         let setAtRoot = !!resolution.setAtRoot;
         for (let i = watchedFailed || 0; i < failedLookupLocations!.length; i++) {
-            setAtRoot = watchFailedLookupLocation(failedLookupLocations![i]) || setAtRoot;
+            setAtRoot = watchFailedLookupLocation(
+                failedLookupLocations![i],
+                getRootDirInfoForResolution(resolution, redirectedReference),
+            ) || setAtRoot;
+        }
+        if (!watchedFailed && alternateResult) {
+            setAtRoot = watchFailedLookupLocation(
+                alternateResult,
+                getRootDirInfoForResolution(resolution, redirectedReference),
+            ) || setAtRoot;
         }
-        if (!watchedFailed && alternateResult) setAtRoot = watchFailedLookupLocation(alternateResult) || setAtRoot;
         if (!resolution.setAtRoot && setAtRoot) {
             // This is always non recursive
-            setDirectoryWatcher(rootDir, rootPath, /*packageDir*/ undefined, /*packageDirPath*/ undefined, /*nonRecursive*/ true);
+            setDirectoryWatcher(
+                getRootDirInfoForResolution(resolution, redirectedReference).rootDir,
+                getRootDirInfoForResolution(resolution, redirectedReference).rootPath,
+                /*packageDir*/ undefined,
+                /*packageDirPath*/ undefined,
+                /*nonRecursive*/ true,
+            );
         }
         resolution.watchedFailed = failedLookupLocations?.length;
         resolution.setAtRoot = setAtRoot;
     }
 
+    function getRootDirInfoForResolution(
+        resolution: ResolutionWithFailedLookupLocations,
+        redirectedReference: ResolvedProjectReference | undefined,
+    ) {
+        return resolution.rootDirInfo ??= getRootDirInfoOfRedirectedReference(redirectedReference);
+    }
+
     function watchAffectingLocationsOfResolution(resolution: ResolutionWithFailedLookupLocations) {
         Debug.assert(!!resolution.files?.size);
         const { affectingLocations, watchedAffected } = resolution;
@@ -1574,7 +1645,10 @@ export function createResolutionCache(
         return dirWatcher;
     }
 
-    function stopWatchFailedLookupLocation(failedLookupLocation: string) {
+    function stopWatchFailedLookupLocation(
+        failedLookupLocation: string,
+        { rootDir, rootPath, rootPathComponents, canWatch }: RootDirInfo,
+    ) {
         const failedLookupLocationPath = resolutionHost.toPath(failedLookupLocation);
         if (endsWith(failedLookupLocationPath, "/package.json")) releasePackageJson(failedLookupLocationPath);
         const toWatch = getDirectoryToWatchFailedLookupLocation(
@@ -1583,7 +1657,7 @@ export function createResolutionCache(
             rootDir,
             rootPath,
             rootPathComponents,
-            isRootWatchable,
+            canWatch,
             getCurrentDirectory,
             resolutionHost.preferNonRecursiveWatch,
         );
@@ -1640,15 +1714,15 @@ export function createResolutionCache(
             if (resolutions?.delete(resolution) && !resolutions.size) resolvedFileToResolution.delete(key);
         }
 
-        const { failedLookupLocations, affectingLocations, alternateResult, setAtRoot } = resolution;
+        const { failedLookupLocations, affectingLocations, alternateResult, setAtRoot, rootDirInfo } = resolution;
         if (resolutionsWithFailedLookups.delete(resolution)) {
             if (failedLookupLocations) {
                 for (const failedLookupLocation of failedLookupLocations) {
-                    stopWatchFailedLookupLocation(failedLookupLocation);
+                    stopWatchFailedLookupLocation(failedLookupLocation, rootDirInfo!);
                 }
             }
-            if (alternateResult) stopWatchFailedLookupLocation(alternateResult);
-            if (setAtRoot) removeDirectoryWatcher(rootPath, /*delayed*/ false);
+            if (alternateResult) stopWatchFailedLookupLocation(alternateResult, rootDirInfo!);
+            if (setAtRoot) removeDirectoryWatcher(rootDirInfo!.rootPath, /*delayed*/ false);
         }
         else if (affectingLocations?.length) {
             resolutionsWithOnlyAffectingLocations.delete(resolution);
@@ -1902,9 +1976,9 @@ export function createResolutionCache(
                 const dirPath = getDirectoryToWatchFailedLookupLocationFromTypeRoot(
                     typeRoot,
                     resolutionHost.toPath(typeRoot),
-                    rootPath,
-                    rootPathComponents,
-                    isRootWatchable,
+                    rootDirInfo.rootPath,
+                    rootDirInfo.rootPathComponents,
+                    rootDirInfo.canWatch,
                     getCurrentDirectory,
                     resolutionHost.preferNonRecursiveWatch,
                     dirPath => directoryWatchesOfFailedLookups.has(dirPath) || dirPathToSymlinkPackageRefCount.has(dirPath),
diff --git a/src/harness/incrementalUtils.ts b/src/harness/incrementalUtils.ts
index 98f81c0a871..59c9bbe5aed 100644
--- a/src/harness/incrementalUtils.ts
+++ b/src/harness/incrementalUtils.ts
@@ -546,11 +546,13 @@ export function verifyResolutionCache(
                 affectingLocations: resolved.affectingLocations,
                 alternateResult: resolved.alternateResult,
                 globalCacheResolution: resolved.globalCacheResolution,
+                rootDirInfo: resolved.rootDirInfo,
             };
             expectedToResolution.set(expectedResolution, resolved);
             resolutionToExpected.set(resolved, expectedResolution);
         }
-        expected.watchResolution(expectedResolution, fileName, () => ({ resolvedFileName }));
+        // We are passing redirectedReference as undefined because we want to use existing rootDirInfo
+        expected.watchResolution(expectedResolution, fileName, () => ({ resolvedFileName }), /*redirectedReference*/ undefined);
         return expectedResolution;
     }
 
diff --git a/tests/baselines/reference/tsserver/autoImportProvider/Does-not-create-auto-import-providers-upon-opening-projects-for-find-all-references.js b/tests/baselines/reference/tsserver/autoImportProvider/Does-not-create-auto-import-providers-upon-opening-projects-for-find-all-references.js
index 73fc7012dba..fdcd5f6cb23 100644
--- a/tests/baselines/reference/tsserver/autoImportProvider/Does-not-create-auto-import-providers-upon-opening-projects-for-find-all-references.js
+++ b/tests/baselines/reference/tsserver/autoImportProvider/Does-not-create-auto-import-providers-upon-opening-projects-for-find-all-references.js
@@ -366,8 +366,8 @@ Info seq  [hh:mm:ss:mss] Config: /user/username/projects/project/packages/a/tsco
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /user/username/projects/project/packages/a/tsconfig.json 2000 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Config file
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages/a 1 undefined Config: /user/username/projects/project/packages/a/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages/a 1 undefined Config: /user/username/projects/project/packages/a/tsconfig.json WatchType: Wild card directory
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages 1 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages 1 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages 0 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/packages 0 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /user/username/projects/project/packages/b/package.json 2000 undefined Project: /user/username/projects/project/tsconfig.json WatchType: File location affecting resolution
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/node_modules/@types 1 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Type roots
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/project/node_modules/@types 1 undefined Project: /user/username/projects/project/tsconfig.json WatchType: Type roots
@@ -654,8 +654,6 @@ FsWatchesRecursive::
   {}
 /user/username/projects/project/node_modules:
   {}
-/user/username/projects/project/packages: *new*
-  {}
 /user/username/projects/project/packages/a: *new*
   {}
 /user/username/projects/project/packages/b:
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_sharedOutDir.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_sharedOutDir.js
index 98c1650fc1f..653d99f449b 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_sharedOutDir.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_sharedOutDir.js
@@ -234,6 +234,8 @@ Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /ho
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/index.ts 500 undefined WatchType: Closed Script info
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/sub 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/sub 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/app/node_modules 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/app/node_modules 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
@@ -389,6 +391,8 @@ watchedDirectoriesRecursive::
 /home/src/workspaces/project/packages/dep: *new*
   {}
   {}
+/home/src/workspaces/project/packages/dep/sub: *new*
+  {}
 /home/src/workspaces/project/packages/node_modules: *new*
   {}
 /home/src/workspaces/project/packages/node_modules/@types: *new*
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_stripSrc.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_stripSrc.js
index c3a4f1761d6..f7cda4ba70b 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_stripSrc.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_stripSrc.js
@@ -127,8 +127,8 @@ Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/p
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/main.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/tslibs/TS/Lib/lib.d.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/app/node_modules 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
@@ -353,6 +353,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep: *new*
   {}
+/home/src/workspaces/project/packages/dep/src: *new*
   {}
 /home/src/workspaces/project/packages/node_modules: *new*
   {}
@@ -504,6 +505,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
@@ -961,6 +963,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toDist.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toDist.js
index 4e4de259059..6f74ca28ba7 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toDist.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toDist.js
@@ -127,8 +127,8 @@ Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/p
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/main.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/tslibs/TS/Lib/lib.d.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/app/node_modules 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
@@ -353,6 +353,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep: *new*
   {}
+/home/src/workspaces/project/packages/dep/src: *new*
   {}
 /home/src/workspaces/project/packages/node_modules: *new*
   {}
@@ -504,6 +505,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
@@ -961,6 +963,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toSrc.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toSrc.js
index 9980fa1ccd5..0acab0a246d 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toSrc.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_paths_toSrc.js
@@ -127,8 +127,8 @@ Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/p
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Config: /home/src/workspaces/project/packages/dep/tsconfig.json WatchType: Wild card directory
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/main.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/tslibs/TS/Lib/lib.d.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/app/node_modules 1 undefined Project: /home/src/workspaces/project/packages/app/tsconfig.json WatchType: Failed Lookup Locations
@@ -353,6 +353,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep: *new*
   {}
+/home/src/workspaces/project/packages/dep/src: *new*
   {}
 /home/src/workspaces/project/packages/node_modules: *new*
   {}
@@ -504,6 +505,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
@@ -961,6 +963,7 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
+/home/src/workspaces/project/packages/dep/src:
   {}
 /home/src/workspaces/project/packages/node_modules:
   {}
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_stripSrc.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_stripSrc.js
index b2f68bd4c0f..8f1fbffa694 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_stripSrc.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_stripSrc.js
@@ -594,8 +594,8 @@ Info seq  [hh:mm:ss:mss] AutoImportProviderProject: found 1 root files in 1 depe
 Info seq  [hh:mm:ss:mss] Creating AutoImportProviderProject: /dev/null/autoImportProviderProject1*, currentDirectory: /home/src/workspaces/project/packages/app
 Info seq  [hh:mm:ss:mss] Starting updateGraphWorker: Project: /dev/null/autoImportProviderProject1*
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/index.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] Finishing updateGraphWorker: Project: /dev/null/autoImportProviderProject1* projectStateVersion: 1 projectProgramVersion: 0 structureChanged: true structureIsReused:: Not Elapsed:: *ms
 Info seq  [hh:mm:ss:mss] Project '/dev/null/autoImportProviderProject1*' (AutoImportProvider)
@@ -702,7 +702,8 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
-  {} *new*
+/home/src/workspaces/project/packages/dep/src: *new*
+  {}
 /home/src/workspaces/project/packages/node_modules:
   {}
   {}
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toDist.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toDist.js
index f789a357bf3..3f564fab71b 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toDist.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toDist.js
@@ -594,8 +594,8 @@ Info seq  [hh:mm:ss:mss] AutoImportProviderProject: found 1 root files in 1 depe
 Info seq  [hh:mm:ss:mss] Creating AutoImportProviderProject: /dev/null/autoImportProviderProject1*, currentDirectory: /home/src/workspaces/project/packages/app
 Info seq  [hh:mm:ss:mss] Starting updateGraphWorker: Project: /dev/null/autoImportProviderProject1*
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/index.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] Finishing updateGraphWorker: Project: /dev/null/autoImportProviderProject1* projectStateVersion: 1 projectProgramVersion: 0 structureChanged: true structureIsReused:: Not Elapsed:: *ms
 Info seq  [hh:mm:ss:mss] Project '/dev/null/autoImportProviderProject1*' (AutoImportProvider)
@@ -702,7 +702,8 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
-  {} *new*
+/home/src/workspaces/project/packages/dep/src: *new*
+  {}
 /home/src/workspaces/project/packages/node_modules:
   {}
   {}
diff --git a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toSrc.js b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toSrc.js
index 1136134965c..7f3c7e165e9 100644
--- a/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toSrc.js
+++ b/tests/baselines/reference/tsserver/fourslashServer/autoImportCrossProject_symlinks_toSrc.js
@@ -585,8 +585,8 @@ Info seq  [hh:mm:ss:mss] AutoImportProviderProject: found 1 root files in 1 depe
 Info seq  [hh:mm:ss:mss] Creating AutoImportProviderProject: /dev/null/autoImportProviderProject1*, currentDirectory: /home/src/workspaces/project/packages/app
 Info seq  [hh:mm:ss:mss] Starting updateGraphWorker: Project: /dev/null/autoImportProviderProject1*
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/index.ts 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src 1 undefined Project: /dev/null/autoImportProviderProject1* WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/workspaces/project/packages/dep/src/sub/folder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] Finishing updateGraphWorker: Project: /dev/null/autoImportProviderProject1* projectStateVersion: 1 projectProgramVersion: 0 structureChanged: true structureIsReused:: Not Elapsed:: *ms
 Info seq  [hh:mm:ss:mss] Project '/dev/null/autoImportProviderProject1*' (AutoImportProvider)
@@ -693,7 +693,8 @@ watchedDirectoriesRecursive::
   {}
 /home/src/workspaces/project/packages/dep:
   {}
-  {} *new*
+/home/src/workspaces/project/packages/dep/src: *new*
+  {}
 /home/src/workspaces/project/packages/node_modules:
   {}
   {}
diff --git a/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project-built.js b/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project-built.js
index e556a8e9bcd..b7240a4f2b7 100644
--- a/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project-built.js
+++ b/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project-built.js
@@ -441,8 +441,8 @@ Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/package.json' does not exist.
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/index.ts' exists - use it as a name resolution result.
 Info seq  [hh:mm:ss:mss] ======== Module name './subfolder' was successfully resolved to '/home/src/projects/project/packages/package-a/src/subfolder/index.ts'. ========
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src/subfolder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] ======== Resolving module '@typescript/lib-es2021' from '/home/src/projects/project/packages/package-b/__lib_node_modules_lookup_lib.es2021.d.ts__.ts'. ========
 Info seq  [hh:mm:ss:mss] Explicitly specified module resolution kind: 'Node10'.
@@ -643,8 +643,6 @@ FsWatchesRecursive::
   {}
 /home/src/projects/project/node_modules/package-a: *new*
   {}
-/home/src/projects/project/packages/package-a: *new*
-  {}
 /home/src/projects/project/packages/package-a/src: *new*
   {}
 /home/src/projects/project/packages/package-b/src: *new*
@@ -892,8 +890,8 @@ Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /ho
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/node_modules/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/node_modules/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/package.json 2000 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: File location affecting resolution
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Finishing updateGraphWorker: Project: /home/src/projects/project/packages/package-b/tsconfig.json projectStateVersion: 2 projectProgramVersion: 1 structureChanged: true structureIsReused:: SafeModules Elapsed:: *ms
 Info seq  [hh:mm:ss:mss] Project '/home/src/projects/project/packages/package-b/tsconfig.json' (Configured)
 Info seq  [hh:mm:ss:mss] 	Files (2)
@@ -972,8 +970,6 @@ FsWatchesRecursive::
 FsWatchesRecursive *deleted*::
 /home/src/projects/project/node_modules/package-a:
   {}
-/home/src/projects/project/packages/package-a:
-  {}
 
 Immedidate callback:: count: 1
 3: semanticCheck *new*
@@ -1196,8 +1192,8 @@ Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/package.json' does not exist.
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/index.ts' exists - use it as a name resolution result.
 Info seq  [hh:mm:ss:mss] ======== Module name './subfolder' was successfully resolved to '/home/src/projects/project/packages/package-a/src/subfolder/index.ts'. ========
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Reusing resolution of module '@typescript/lib-es2021' from '/home/src/projects/project/packages/package-b/__lib_node_modules_lookup_lib.es2021.d.ts__.ts' of old program, it was not resolved.
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-b/package-aX 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-b/package-aX 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
@@ -1277,8 +1273,6 @@ FsWatchesRecursive::
   {}
 /home/src/projects/project/node_modules/package-a: *new*
   {}
-/home/src/projects/project/packages/package-a: *new*
-  {}
 /home/src/projects/project/packages/package-a/src:
   {}
 /home/src/projects/project/packages/package-b/src:
diff --git a/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project.js b/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project.js
index 4347c027262..16624f049e1 100644
--- a/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project.js
+++ b/tests/baselines/reference/tsserver/moduleResolution/using-referenced-project.js
@@ -256,8 +256,8 @@ Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/package.json' does not exist.
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/index.ts' exists - use it as a name resolution result.
 Info seq  [hh:mm:ss:mss] ======== Module name './subfolder' was successfully resolved to '/home/src/projects/project/packages/package-a/src/subfolder/index.ts'. ========
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src/subfolder/index.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] ======== Resolving module '@typescript/lib-es2021' from '/home/src/projects/project/packages/package-b/__lib_node_modules_lookup_lib.es2021.d.ts__.ts'. ========
 Info seq  [hh:mm:ss:mss] Explicitly specified module resolution kind: 'Node10'.
@@ -460,8 +460,6 @@ FsWatchesRecursive::
   {}
 /home/src/projects/project/node_modules/package-a: *new*
   {}
-/home/src/projects/project/packages/package-a: *new*
-  {}
 /home/src/projects/project/packages/package-a/src: *new*
   {}
 /home/src/projects/project/packages/package-b/src: *new*
@@ -709,8 +707,8 @@ Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /ho
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/node_modules/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/node_modules/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/package.json 2000 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: File location affecting resolution
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Finishing updateGraphWorker: Project: /home/src/projects/project/packages/package-b/tsconfig.json projectStateVersion: 2 projectProgramVersion: 1 structureChanged: true structureIsReused:: SafeModules Elapsed:: *ms
 Info seq  [hh:mm:ss:mss] Project '/home/src/projects/project/packages/package-b/tsconfig.json' (Configured)
 Info seq  [hh:mm:ss:mss] 	Files (2)
@@ -789,8 +787,6 @@ FsWatchesRecursive::
 FsWatchesRecursive *deleted*::
 /home/src/projects/project/node_modules/package-a:
   {}
-/home/src/projects/project/packages/package-a:
-  {}
 
 Immedidate callback:: count: 1
 3: semanticCheck *new*
@@ -1013,8 +1009,8 @@ Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/package.json' does not exist.
 Info seq  [hh:mm:ss:mss] File '/home/src/projects/project/packages/package-a/src/subfolder/index.ts' exists - use it as a name resolution result.
 Info seq  [hh:mm:ss:mss] ======== Module name './subfolder' was successfully resolved to '/home/src/projects/project/packages/package-a/src/subfolder/index.ts'. ========
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /home/src/projects/project/packages/package-a/src 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Reusing resolution of module '@typescript/lib-es2021' from '/home/src/projects/project/packages/package-b/__lib_node_modules_lookup_lib.es2021.d.ts__.ts' of old program, it was not resolved.
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-b/package-aX 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Close:: WatchInfo: /home/src/projects/project/packages/package-b/package-aX 1 undefined Project: /home/src/projects/project/packages/package-b/tsconfig.json WatchType: Failed Lookup Locations
@@ -1094,8 +1090,6 @@ FsWatchesRecursive::
   {}
 /home/src/projects/project/node_modules/package-a: *new*
   {}
-/home/src/projects/project/packages/package-a: *new*
-  {}
 /home/src/projects/project/packages/package-a/src:
   {}
 /home/src/projects/project/packages/package-b/src:
diff --git a/tests/baselines/reference/tsserver/projectReferences/when-the-referenced-projects-have-allowJs-and-emitDeclarationOnly.js b/tests/baselines/reference/tsserver/projectReferences/when-the-referenced-projects-have-allowJs-and-emitDeclarationOnly.js
index a9902f78767..26d5a1a1f90 100644
--- a/tests/baselines/reference/tsserver/projectReferences/when-the-referenced-projects-have-allowJs-and-emitDeclarationOnly.js
+++ b/tests/baselines/reference/tsserver/projectReferences/when-the-referenced-projects-have-allowJs-and-emitDeclarationOnly.js
@@ -142,8 +142,8 @@ Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/pr
 Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/node_modules 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite/package.json 2000 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: File location affecting resolution
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite/src/index.js 500 undefined WatchType: Closed Script info
-Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Failed Lookup Locations
-Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite/src 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Failed Lookup Locations
+Info seq  [hh:mm:ss:mss] Elapsed:: *ms DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite/src 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Failed Lookup Locations
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/emit-composite/src/testModule.js 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] FileWatcher:: Added:: WatchInfo: /home/src/tslibs/TS/Lib/lib.d.ts 500 undefined WatchType: Closed Script info
 Info seq  [hh:mm:ss:mss] DirectoryWatcher:: Added:: WatchInfo: /user/username/projects/myproject/packages/consumer/node_modules/@types 1 undefined Project: /user/username/projects/myproject/packages/consumer/tsconfig.json WatchType: Type roots
@@ -287,8 +287,6 @@ FsWatchesRecursive::
   {}
 /user/username/projects/myproject/packages/consumer/src: *new*
   {}
-/user/username/projects/myproject/packages/emit-composite: *new*
-  {}
 /user/username/projects/myproject/packages/emit-composite/src: *new*
   {}