diff --git a/src/install/PackageInstall.rs b/src/install/PackageInstall.rs
index 50043c09ed1e..8219093b1540 100644
--- a/src/install/PackageInstall.rs
+++ b/src/install/PackageInstall.rs
@@ -1800,7 +1800,7 @@ impl<'a> PackageInstall<'a> {
                                 }
 
                                 let _ = sys::unlinkat(destination_dir, entry.path);
-                                sys::symlinkat(entry.basename, destination_dir.fd(), entry.path)?;
+                                sys::symlinkat(target, destination_dir.fd(), entry.path)?;
                             }
                         }
                         _ => {}
@@ -1850,6 +1850,12 @@ impl<'a> PackageInstall<'a> {
                         }
                         EntryKind::File => match sys::symlink_w(dest, src, Default::default()) {
                             Err(err) => {
+                                if err.get_errno() == sys::E::EEXIST {
+                                    let _ = sys::unlink_w(dest);
+                                    sys::symlink_w(dest, src, Default::default())?;
+                                    continue;
+                                }
+
                                 if let Some(entry_dirname) =
                                     bun_paths::Dirname::dirname_u16(entry.path.as_slice())
                                 {
diff --git a/src/install/lockfile/bun.lock.rs b/src/install/lockfile/bun.lock.rs
index 1741eb7dbf7e..490578a8480e 100644
--- a/src/install/lockfile/bun.lock.rs
+++ b/src/install/lockfile/bun.lock.rs
@@ -2542,11 +2542,9 @@ pub(crate) fn parse_into_binary_lockfile(
                 return Err(ParseError::InvalidPackageInfo);
             };
 
-            let pkg_info = pkg_info.items();
-            if pkg_info.len() < 3 {
-                continue;
-            }
-            let Some(maybe_info_obj) = pkg_info[2].as_object() else {
+            // Index 2 for an npm resolution (after the registry string), index 1 otherwise.
+            let Some(maybe_info_obj) = pkg_info.items().iter().find_map(|item| item.as_object())
+            else {
                 continue;
             };
             let Some(&JSON::E::JsonValue::Boolean(bundled)) = maybe_info_obj.get(b"bundled") else {
diff --git a/test/cli/install/bun-install-registry.test.ts b/test/cli/install/bun-install-registry.test.ts
index fb5d4f931e60..08bdf5c9bd11 100644
--- a/test/cli/install/bun-install-registry.test.ts
+++ b/test/cli/install/bun-install-registry.test.ts
@@ -1494,6 +1494,97 @@ describe("bundledDependencies", () => {
       await check();
     });
   }
+
+  // bundled-file@1.0.0 depends on "bundled-file-dep" through a `file:` spec and
+  // bundles it. The tarball ships the bundled copy in its node_modules. The
+  // install from bun.lock must keep treating the dependency as bundled and must
+  // not replace the bundled copy with symlinks.
+  test("(bun.lock) file: dependency stays bundled when installing from the lockfile", async () => {
+    await write(
+      packageJson,
+      JSON.stringify({
+        name: "bundled-file-root",
+        dependencies: {
+          "bundled-file": "1.0.0",
+        },
+      }),
+    );
+
+    const bundledDepDir = join(packageDir, "node_modules", "bundled-file", "node_modules", "bundled-file-dep");
+
+    async function check() {
+      const [pkgJsonStat, indexStat] = await Promise.all([
+        lstat(join(bundledDepDir, "package.json")),
+        lstat(join(bundledDepDir, "index.js")),
+      ]);
+      expect([pkgJsonStat.isFile(), indexStat.isFile()]).toEqual([true, true]);
+
+      await using proc = spawn({
+        cmd: [bunExe(), "-e", `console.log(require("bundled-file"))`],
+        cwd: packageDir,
+        stdout: "pipe",
+        stderr: "pipe",
+        env,
+      });
+      const [stdout, stderr, exitCode] = await Promise.all([proc.stdout.text(), proc.stderr.text(), proc.exited]);
+      expect(stderr).toBe("");
+      expect(stdout).toBe("bundled-file-dep\n");
+      expect(exitCode).toBe(0);
+    }
+
+    let { out } = await runBunInstall(env, packageDir, { saveTextLockfile: true });
+    expect(out).toContain("1 package installed");
+    await check();
+
+    const lockfile = await file(join(packageDir, "bun.lock")).text();
+    expect(lockfile).toContain(
+      `"bundled-file/bundled-file-dep": ["bundled-file-dep@file:vendor/bundled-file-dep", { "bundled": true }],`,
+    );
+
+    await rm(join(packageDir, "node_modules"), { recursive: true, force: true });
+
+    ({ out } = await runBunInstall(env, packageDir, { frozenLockfile: true }));
+    expect(out).toContain("1 package installed");
+    await check();
+  });
+
+  // bundled-file@2.0.0 ships node_modules/bundled-file-dep in its tarball but
+  // does not bundle it. The install links the `file:` dependency over those
+  // files. The links must point at the cached vendor copy, not at themselves.
+  test("file: dependency links over files the tarball already shipped", async () => {
+    await write(
+      packageJson,
+      JSON.stringify({
+        name: "unbundled-file-root",
+        dependencies: {
+          "bundled-file": "2.0.0",
+        },
+      }),
+    );
+
+    const { out } = await runBunInstall(env, packageDir, { saveTextLockfile: true });
+    expect(out).toContain("2 packages installed");
+
+    const depDir = join(packageDir, "node_modules", "bundled-file", "node_modules", "bundled-file-dep");
+    const [pkgJsonStat, indexStat] = await Promise.all([
+      lstat(join(depDir, "package.json")),
+      lstat(join(depDir, "index.js")),
+    ]);
+    expect([pkgJsonStat.isSymbolicLink(), indexStat.isSymbolicLink()]).toEqual([true, true]);
+    expect(await readlink(join(depDir, "package.json"))).toEndWith(join("vendor", "bundled-file-dep", "package.json"));
+
+    await using proc = spawn({
+      cmd: [bunExe(), "-e", `console.log(require("bundled-file"))`],
+      cwd: packageDir,
+      stdout: "pipe",
+      stderr: "pipe",
+      env,
+    });
+    const [stdout, stderr, exitCode] = await Promise.all([proc.stdout.text(), proc.stderr.text(), proc.exited]);
+    expect(stderr).toBe("");
+    expect(stdout).toBe("bundled-file-dep\n");
+    expect(exitCode).toBe(0);
+  });
 });
 
 describe("optionalDependencies", () => {
diff --git a/test/cli/install/registry/packages/bundled-file/bundled-file-1.0.0.tgz b/test/cli/install/registry/packages/bundled-file/bundled-file-1.0.0.tgz
new file mode 100644
index 000000000000..dbe0552b9f18
Binary files /dev/null and b/test/cli/install/registry/packages/bundled-file/bundled-file-1.0.0.tgz differ
diff --git a/test/cli/install/registry/packages/bundled-file/bundled-file-2.0.0.tgz b/test/cli/install/registry/packages/bundled-file/bundled-file-2.0.0.tgz
new file mode 100644
index 000000000000..6a1f0e3e4692
Binary files /dev/null and b/test/cli/install/registry/packages/bundled-file/bundled-file-2.0.0.tgz differ
diff --git a/test/cli/install/registry/packages/bundled-file/package.json b/test/cli/install/registry/packages/bundled-file/package.json
new file mode 100644
index 000000000000..3190852462f2
--- /dev/null
+++ b/test/cli/install/registry/packages/bundled-file/package.json
@@ -0,0 +1,38 @@
+{
+  "_id": "bundled-file",
+  "name": "bundled-file",
+  "dist-tags": {
+    "latest": "2.0.0"
+  },
+  "versions": {
+    "1.0.0": {
+      "name": "bundled-file",
+      "version": "1.0.0",
+      "dependencies": {
+        "bundled-file-dep": "file:vendor/bundled-file-dep"
+      },
+      "bundleDependencies": [
+        "bundled-file-dep"
+      ],
+      "_id": "bundled-file@1.0.0",
+      "dist": {
+        "integrity": "sha512-1kQd7SfufR6wmrYo6L8J2jZm34WCaJyJj7KoskI+P3S+PuYpZ01rpuH+N15mtjUBcoVkVorPBxaOcSrX0H7ytg==",
+        "shasum": "7e59fee2055f735ed039b470f15d95c3612e99b9",
+        "tarball": "http://localhost:4873/bundled-file/-/bundled-file-1.0.0.tgz"
+      }
+    },
+    "2.0.0": {
+      "name": "bundled-file",
+      "version": "2.0.0",
+      "dependencies": {
+        "bundled-file-dep": "file:vendor/bundled-file-dep"
+      },
+      "_id": "bundled-file@2.0.0",
+      "dist": {
+        "integrity": "sha512-tFSzHwAOxEKDbBAHK/MY8RQEQ1KdQu6+bJYnW8/lZybGuZG2MoYWvksteDGjsWyXBimCSz7XWjo/ENEU9tsDNg==",
+        "shasum": "cd4c6b205128b53321bad299e60d7c6afb1f6c0e",
+        "tarball": "http://localhost:4873/bundled-file/-/bundled-file-2.0.0.tgz"
+      }
+    }
+  }
+}
\ No newline at end of file
diff --git a/test/cli/install/registry/packages/create-bundled-file-packages.ts b/test/cli/install/registry/packages/create-bundled-file-packages.ts
new file mode 100644
index 000000000000..836d009ea924
--- /dev/null
+++ b/test/cli/install/registry/packages/create-bundled-file-packages.ts
@@ -0,0 +1,75 @@
+#!/usr/bin/env bun
+/**
+ * Generates the `bundled-file` fixture used by bun-install-registry.test.ts.
+ *
+ * Both versions depend on `bundled-file-dep` through a `file:` spec
+ * (`file:vendor/bundled-file-dep`) and ship both `vendor/bundled-file-dep/`
+ * and a copy under `node_modules/bundled-file-dep/`, the way `npm pack` does
+ * for a bundled `file:` dependency.
+ *
+ * - bundled-file@1.0.0  lists the dependency in `bundleDependencies`. A `file:`
+ *   resolution has its `bundled: true` marker at a different index in bun.lock
+ *   than an npm resolution, so an install from the lockfile must still treat
+ *   the dependency as bundled.
+ * - bundled-file@2.0.0  does not bundle it. The install has to link the
+ *   `file:` dependency over the files the tarball already put in place.
+ */
+
+import { mkdir, writeFile } from "fs/promises";
+import { join } from "path";
+
+const packagesDir = import.meta.dir;
+
+const name = "bundled-file";
+const depName = "bundled-file-dep";
+
+const dir = join(packagesDir, name);
+await mkdir(dir, { recursive: true });
+
+const depPkgJson = JSON.stringify({ name: depName, version: "1.0.0", main: "index.js" }, null, 2);
+const depIndex = `module.exports = "${depName}";\n`;
+
+const versions: Record<string, object> = {};
+let latest = "";
+for (const [version, bundled] of [
+  ["1.0.0", true],
+  ["2.0.0", false],
+] as const) {
+  const pkgJson = {
+    name,
+    version,
+    dependencies: { [depName]: `file:vendor/${depName}` },
+    ...(bundled ? { bundleDependencies: [depName] } : {}),
+  };
+
+  const files: Record<string, string> = {
+    "package/package.json": JSON.stringify(pkgJson, null, 2),
+    "package/index.js": `module.exports = require("${depName}");\n`,
+    [`package/vendor/${depName}/package.json`]: depPkgJson,
+    [`package/vendor/${depName}/index.js`]: depIndex,
+    [`package/node_modules/${depName}/package.json`]: depPkgJson,
+    [`package/node_modules/${depName}/index.js`]: depIndex,
+  };
+
+  const tarball = join(dir, `${name}-${version}.tgz`);
+  await Bun.Archive.write(tarball, files, { compress: "gzip" });
+
+  const bytes = await Bun.file(tarball).bytes();
+  versions[version] = {
+    ...pkgJson,
+    _id: `${name}@${version}`,
+    dist: {
+      integrity: `sha512-${Buffer.from(new Bun.CryptoHasher("sha512").update(bytes).digest()).toString("base64")}`,
+      shasum: new Bun.CryptoHasher("sha1").update(bytes).digest("hex"),
+      tarball: `http://localhost:4873/${name}/-/${name}-${version}.tgz`,
+    },
+  };
+  latest = version;
+}
+
+await writeFile(
+  join(dir, "package.json"),
+  JSON.stringify({ _id: name, name, "dist-tags": { latest }, versions }, null, 2),
+);
+
+console.log("Created bundled-file test packages");