Cursor trying to overwrite although there is nothing to ovewrite

I have almost all the features turned on, including experimental and beta features.

I asked it to integrate milkdown to my project, although it generated gibberish, so I stashed it and started over. Now while trying a slightly different query, it tries to access the “existing file” although there is no existing file (yeah I deleted it). It messes the whole thing up again and again because of this.

And when it finally produces some edits, it tries to “overwrite the existing file” although I’m not sure from where did the previous file come.

Any help is appreciated.