fix(lib): ExtractWorkspace now recurses into subdirectories

Was skipping directories entirely (`if entry.IsDir() { continue }`),
so .core/reference/ and its contents were never extracted.
Replaced fs.ReadDir loop with fs.WalkDir to handle nested dirs.

Added tests: CreatesFiles, CreatesSubdirectories, TemplateSubstitution.

Co-Authored-By: Virgil <virgil@lethean.io>

pkg/lib/lib.go

@@ -139,31 +139,39 @@ type WorkspaceData struct {
 // Template names: "default", "security", "review".
 func ExtractWorkspace(tmplName, targetDir string, data *WorkspaceData) error {
 	wsDir := "workspace/" + tmplName
-	entries, err := fs.ReadDir(workspaceFS, wsDir)
-	if err != nil {
-		return err
-	}
 
 	if err := os.MkdirAll(targetDir, 0755); err != nil {
 		return err
 	}
 
-	for _, entry := range entries {
-		if entry.IsDir() {
-			continue
+	return fs.WalkDir(workspaceFS, wsDir, func(path string, d fs.DirEntry, err error) error {
+		if err != nil {
+			return err
 		}
 
-		name := entry.Name()
-		content, err := fs.ReadFile(workspaceFS, wsDir+"/"+name)
+		// Get relative path from template root
+		rel, err := filepath.Rel(wsDir, path)
+		if err != nil || rel == "." {
+			return nil
+		}
+
+		targetPath := filepath.Join(targetDir, rel)
+
+		if d.IsDir() {
+			return os.MkdirAll(targetPath, 0755)
+		}
+
+		content, err := fs.ReadFile(workspaceFS, path)
 		if err != nil {
 			return err
 		}
 
 		// Process .tmpl files through text/template
-		outputName := name
-		if core.HasSuffix(name, ".tmpl") {
-			outputName = core.TrimSuffix(name, ".tmpl")
-			tmpl, err := template.New(name).Parse(string(content))
+		outputName := filepath.Base(targetPath)
+		if core.HasSuffix(outputName, ".tmpl") {
+			outputName = core.TrimSuffix(outputName, ".tmpl")
+			targetPath = filepath.Join(filepath.Dir(targetPath), outputName)
+			tmpl, err := template.New(outputName).Parse(string(content))
 			if err != nil {
 				return err
 			}
@@ -174,12 +182,8 @@ func ExtractWorkspace(tmplName, targetDir string, data *WorkspaceData) error {
 			content = buf.Bytes()
 		}
 
-		if err := os.WriteFile(filepath.Join(targetDir, outputName), content, 0644); err != nil {
-			return err
-		}
-	}
-
-	return nil
+		return os.WriteFile(targetPath, content, 0644)
+	})
 }
 
 // --- List Functions ---

pkg/lib/lib_test.go

@@ -0,0 +1,88 @@
+package lib
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+)
+
+func TestExtractWorkspace_CreatesFiles(t *testing.T) {
+	dir := t.TempDir()
+	data := &WorkspaceData{Repo: "test-repo", Task: "test task"}
+
+	err := ExtractWorkspace("default", dir, data)
+	if err != nil {
+		t.Fatalf("ExtractWorkspace failed: %v", err)
+	}
+
+	// Check top-level template files exist
+	for _, name := range []string{"CODEX.md", "CLAUDE.md", "PROMPT.md", "TODO.md", "CONTEXT.md"} {
+		path := filepath.Join(dir, name)
+		if _, err := os.Stat(path); os.IsNotExist(err) {
+			t.Errorf("expected %s to exist", name)
+		}
+	}
+}
+
+func TestExtractWorkspace_CreatesSubdirectories(t *testing.T) {
+	dir := t.TempDir()
+	data := &WorkspaceData{Repo: "test-repo", Task: "test task"}
+
+	err := ExtractWorkspace("default", dir, data)
+	if err != nil {
+		t.Fatalf("ExtractWorkspace failed: %v", err)
+	}
+
+	// Check .core/reference/ directory exists with files
+	refDir := filepath.Join(dir, ".core", "reference")
+	if _, err := os.Stat(refDir); os.IsNotExist(err) {
+		t.Fatalf(".core/reference/ directory not created")
+	}
+
+	// Check AX spec exists
+	axSpec := filepath.Join(refDir, "RFC-025-AGENT-EXPERIENCE.md")
+	if _, err := os.Stat(axSpec); os.IsNotExist(err) {
+		t.Errorf("AX spec not extracted: %s", axSpec)
+	}
+
+	// Check Core source files exist
+	entries, err := os.ReadDir(refDir)
+	if err != nil {
+		t.Fatalf("failed to read reference dir: %v", err)
+	}
+
+	goFiles := 0
+	for _, e := range entries {
+		if filepath.Ext(e.Name()) == ".go" {
+			goFiles++
+		}
+	}
+	if goFiles == 0 {
+		t.Error("no .go files in .core/reference/")
+	}
+
+	// Check docs subdirectory
+	docsDir := filepath.Join(refDir, "docs")
+	if _, err := os.Stat(docsDir); os.IsNotExist(err) {
+		t.Errorf(".core/reference/docs/ not created")
+	}
+}
+
+func TestExtractWorkspace_TemplateSubstitution(t *testing.T) {
+	dir := t.TempDir()
+	data := &WorkspaceData{Repo: "my-repo", Task: "fix the bug"}
+
+	err := ExtractWorkspace("default", dir, data)
+	if err != nil {
+		t.Fatalf("ExtractWorkspace failed: %v", err)
+	}
+
+	// TODO.md should contain the task
+	content, err := os.ReadFile(filepath.Join(dir, "TODO.md"))
+	if err != nil {
+		t.Fatalf("failed to read TODO.md: %v", err)
+	}
+	if len(content) == 0 {
+		t.Error("TODO.md is empty")
+	}
+}