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A Python project in a folder of the opened project, such as a Django project with manage.py in src/, looked for its virtualenv or lock file only in that folder, so with .venv, uv.lock or poetry.lock at the root it ran with the system python3. The lookup now walks up to the opened project; virtualenv and Pixi paths found above get a ../ prefix. Only a folder's own virtualenv makes it a pytest project, so folders borrowing the root environment do not each get a pytest run. Co-authored-by: andreabasile <7715018+andreabasile@users.noreply.github.com>