**To Reproduce** Steps to reproduce the behavior: 1. Open project linked in https://github.com/swiftlang/vscode-swift/issues/1630#issuecomment-2991019835 in vscode 2. Enable `swift.searchSubfoldersForPackages` and reload the window 3. Notice swift extension never activates 4. Open a swift file in subfolder and notice it activates right away **Expected behavior** Should activate if Package.swift is in root or a subfolder