diff --git a/fs/indexed-pkg-importer/src/importIndexedDir.ts b/fs/indexed-pkg-importer/src/importIndexedDir.ts
index 41e04303128..5b5994bfbef 100644
--- a/fs/indexed-pkg-importer/src/importIndexedDir.ts
+++ b/fs/indexed-pkg-importer/src/importIndexedDir.ts
@@ -126,6 +126,7 @@ async function moveOrMergeModulesDirs (src: string, dest: string) {
       return
     case 'ENOTEMPTY':
     case 'EPERM': // This error code is thrown on Windows
+      // The newly added dependency might have node_modules if it has bundled dependencies.
       await mergeModulesDirs(src, dest)
       return
     default:
diff --git a/pkg-manager/core/src/install/index.ts b/pkg-manager/core/src/install/index.ts
index 00c8392791e..a4ea065d367 100644
--- a/pkg-manager/core/src/install/index.ts
+++ b/pkg-manager/core/src/install/index.ts
@@ -344,7 +344,7 @@ export async function mutateModules (
               nodeVersion: opts.nodeVersion,
               pnpmVersion: opts.packageManager.name === 'pnpm' ? opts.packageManager.version : '',
             },
-            currentDependenciesLocations: ctx.modulesFile?.locations,
+            currentHoistedLocations: ctx.modulesFile?.hoistedLocations,
             patchedDependencies: patchedDependenciesWithResolvedPath,
             selectedProjectDirs: projects.map((project) => project.rootDir),
             allProjects: ctx.projects,
@@ -1178,7 +1178,7 @@ const installInContext: InstallFunction = async (projects, ctx, opts) => {
           nodeVersion: opts.nodeVersion,
           pnpmVersion: opts.packageManager.name === 'pnpm' ? opts.packageManager.version : '',
         },
-        currentDependenciesLocations: ctx.modulesFile?.locations,
+        currentHoistedLocations: ctx.modulesFile?.hoistedLocations,
         selectedProjectDirs: projects.map((project) => project.rootDir),
         allProjects: ctx.projects,
         prunedAt: ctx.modulesFile?.prunedAt,
diff --git a/pkg-manager/headless/src/index.ts b/pkg-manager/headless/src/index.ts
index 6a62c33c250..88ebbb1645e 100644
--- a/pkg-manager/headless/src/index.ts
+++ b/pkg-manager/headless/src/index.ts
@@ -120,7 +120,7 @@ export interface HeadlessOptions {
   hoistedDependencies: HoistedDependencies
   hoistPattern?: string[]
   publicHoistPattern?: string[]
-  currentDependenciesLocations?: Record<string, string[]>
+  currentHoistedLocations?: Record<string, string[]>
   lockfileDir: string
   modulesDir?: string
   virtualStoreDir?: string
@@ -284,7 +284,7 @@ export async function headlessInstall (opts: HeadlessOptions) {
     directDependenciesByImporterId,
     graph,
     hierarchy,
-    locations,
+    hoistedLocations,
     pkgLocationsByDepPath,
     prevGraph,
     symlinkedDirectDependenciesByImporterId,
@@ -530,7 +530,7 @@ export async function headlessInstall (opts: HeadlessOptions) {
       included: opts.include,
       injectedDeps,
       layoutVersion: LAYOUT_VERSION,
-      locations,
+      hoistedLocations,
       nodeLinker: opts.nodeLinker,
       packageManager: `${opts.packageManager.name}@${opts.packageManager.version}`,
       pendingBuilds: opts.pendingBuilds,
diff --git a/pkg-manager/headless/src/lockfileToDepGraph.ts b/pkg-manager/headless/src/lockfileToDepGraph.ts
index 62a9b820891..bbd68ac6900 100644
--- a/pkg-manager/headless/src/lockfileToDepGraph.ts
+++ b/pkg-manager/headless/src/lockfileToDepGraph.ts
@@ -80,7 +80,7 @@ export interface LockfileToDepGraphResult {
   directDependenciesByImporterId: DirectDependenciesByImporterId
   graph: DependenciesGraph
   hierarchy?: DepHierarchy
-  locations?: Record<string, string[]>
+  hoistedLocations?: Record<string, string[]>
   symlinkedDirectDependenciesByImporterId?: DirectDependenciesByImporterId
   prevGraph?: DependenciesGraph
   pkgLocationsByDepPath?: Record<string, string[]>
diff --git a/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts b/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
index 7e88873e8a0..a284e979ce6 100644
--- a/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
+++ b/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
@@ -32,7 +32,7 @@ export interface LockfileToHoistedDepGraphOptions {
   externalDependencies?: Set<string>
   importerIds: string[]
   include: IncludedDependencies
-  currentDependenciesLocations?: Record<string, string[]>
+  currentHoistedLocations?: Record<string, string[]>
   lockfileDir: string
   nodeVersion: string
   pnpmVersion: string
@@ -74,10 +74,10 @@ async function _lockfileToHoistedDepGraph (
     lockfile,
     graph,
     pkgLocationsByDepPath: {},
+    hoistedLocations: {} as Record<string, string[]>,
   }
-  const locations: Record<string, string[]> = {}
   const hierarchy = {
-    [opts.lockfileDir]: await fetchDeps(fetchDepsOpts, modulesDir, tree.dependencies, locations),
+    [opts.lockfileDir]: await fetchDeps(fetchDepsOpts, modulesDir, tree.dependencies),
   }
   const directDependenciesByImporterId: DirectDependenciesByImporterId = {
     '.': directDepsMap(Object.keys(hierarchy[opts.lockfileDir]), graph),
@@ -89,7 +89,7 @@ async function _lockfileToHoistedDepGraph (
       const importerId = reference.replace('workspace:', '')
       const projectDir = path.join(opts.lockfileDir, importerId)
       const modulesDir = path.join(projectDir, 'node_modules')
-      const nextHierarchy = (await fetchDeps(fetchDepsOpts, modulesDir, rootDep.dependencies, locations))
+      const nextHierarchy = (await fetchDeps(fetchDepsOpts, modulesDir, rootDep.dependencies))
       hierarchy[projectDir] = nextHierarchy
 
       const importer = lockfile.importers[importerId]
@@ -104,7 +104,7 @@ async function _lockfileToHoistedDepGraph (
     hierarchy,
     pkgLocationsByDepPath: fetchDepsOpts.pkgLocationsByDepPath,
     symlinkedDirectDependenciesByImporterId,
-    locations,
+    hoistedLocations: fetchDepsOpts.hoistedLocations,
   }
 }
 
@@ -139,10 +139,10 @@ async function fetchDeps (
     graph: DependenciesGraph
     lockfile: Lockfile
     pkgLocationsByDepPath: Record<string, string[]>
+    hoistedLocations: Record<string, string[]>
   } & LockfileToHoistedDepGraphOptions,
   modules: string,
   deps: Set<HoisterResult>,
-  locations: Record<string, string[]>
 ): Promise<DepHierarchy> {
   const depHierarchy = {}
   await Promise.all(Array.from(deps).map(async (dep) => {
@@ -180,7 +180,7 @@ async function fetchDeps (
     const depLocation = path.relative(opts.lockfileDir, dir)
     const resolution = pkgSnapshotToResolution(depPath, pkgSnapshot, opts.registries)
     let fetchResponse!: ReturnType<FetchPackageToStoreFunction>
-    const skipFetch = opts.currentDependenciesLocations?.[depPath]?.includes(depLocation)
+    const skipFetch = opts.currentHoistedLocations?.[depPath]?.includes(depLocation)
     if (skipFetch) {
       fetchResponse = {} as any // eslint-disable-line @typescript-eslint/no-explicit-any
     } else {
@@ -225,11 +225,11 @@ async function fetchDeps (
       opts.pkgLocationsByDepPath[depPath] = []
     }
     opts.pkgLocationsByDepPath[depPath].push(dir)
-    depHierarchy[dir] = await fetchDeps(opts, path.join(dir, 'node_modules'), dep.dependencies, locations)
-    if (!locations[depPath]) {
-      locations[depPath] = []
+    depHierarchy[dir] = await fetchDeps(opts, path.join(dir, 'node_modules'), dep.dependencies)
+    if (!opts.hoistedLocations[depPath]) {
+      opts.hoistedLocations[depPath] = []
     }
-    locations[depPath].push(depLocation)
+    opts.hoistedLocations[depPath].push(depLocation)
     opts.graph[dir].children = getChildren(pkgSnapshot, opts.pkgLocationsByDepPath, opts)
   }))
   return depHierarchy
diff --git a/pkg-manager/modules-yaml/src/index.ts b/pkg-manager/modules-yaml/src/index.ts
index 9269bc5df5d..0029cc669fd 100644
--- a/pkg-manager/modules-yaml/src/index.ts
+++ b/pkg-manager/modules-yaml/src/index.ts
@@ -31,7 +31,7 @@ export interface Modules {
   storeDir: string
   virtualStoreDir: string
   injectedDeps?: Record<string, string[]>
-  locations?: Record<string, string[]>
+  hoistedLocations?: Record<string, string[]>
 }
 
 export async function readModulesManifest (modulesDir: string): Promise<Modules | null> {