diff --git a/src/vs/workbench/contrib/chat/browser/chatAttachmentModel/chatInstructionsFileLocator.ts b/src/vs/workbench/contrib/chat/browser/chatAttachmentModel/chatInstructionsFileLocator.ts
index 99d0cf7dd3bc7..2d09533d6725d 100644
--- a/src/vs/workbench/contrib/chat/browser/chatAttachmentModel/chatInstructionsFileLocator.ts
+++ b/src/vs/workbench/contrib/chat/browser/chatAttachmentModel/chatInstructionsFileLocator.ts
@@ -7,8 +7,8 @@ import { URI } from '../../../../../base/common/uri.js';
 import { PromptFilesConfig } from '../../common/promptSyntax/config.js';
 import { dirname, extUri } from '../../../../../base/common/resources.js';
 import { IFileService } from '../../../../../platform/files/common/files.js';
+import { IWorkspaceContextService } from '../../../../../platform/workspace/common/workspace.js';
 import { IConfigurationService } from '../../../../../platform/configuration/common/configuration.js';
-import { IWorkspaceContextService, WorkbenchState } from '../../../../../platform/workspace/common/workspace.js';
 import { PROMPT_SNIPPET_FILE_EXTENSION } from '../../common/promptSyntax/contentProviders/promptContentsProviderBase.js';
 
 /**
@@ -50,26 +50,26 @@ export class ChatInstructionsFileLocator {
 	 * @returns List of possible prompt instructions file locations.
 	 */
 	private getSourceLocations(): readonly URI[] {
-		const state = this.workspaceService.getWorkbenchState();
-
-		// nothing to do if the workspace is empty
-		if (state === WorkbenchState.EMPTY) {
-			return [];
-		}
-
 		const sourceLocations = PromptFilesConfig.sourceLocations(this.configService);
 		const result = [];
 
 		// otherwise for each folder provided in the configuration, create
 		// a URI per each folder in the current workspace
-		const { folders } = this.workspaceService.getWorkspace();
-		const workspaceRootUri = dirname(folders[0].uri);
-		for (const folder of folders) {
-			for (const sourceFolderName of sourceLocations) {
+		for (const sourceFolderName of sourceLocations) {
+			// if source folder is an absolute path, add the path as is
+			// without trying to resolve it against the workspace folders
+			const sourceFolderUri = URI.file(sourceFolderName);
+			if (sourceFolderUri.path === sourceFolderName) {
+				result.push(sourceFolderUri);
+				continue;
+			}
+
+			const { folders } = this.workspaceService.getWorkspace();
+			for (const folder of folders) {
 				// create the source path as a path relative to the workspace
 				// folder, or as an absolute path if the absolute value is provided
-				const sourceFolderUri = extUri.resolvePath(folder.uri, sourceFolderName);
-				result.push(sourceFolderUri);
+				const relativeFolderUri = extUri.resolvePath(folder.uri, sourceFolderName);
+				result.push(relativeFolderUri);
 
 				// if not inside a workspace, we are done
 				if (folders.length <= 1) {
@@ -79,6 +79,7 @@ export class ChatInstructionsFileLocator {
 				// if inside a workspace, consider the specified source location inside
 				// the workspace root, to allow users to use some (e.g., `.github/prompts`)
 				// folder as a top-level folder in the workspace
+				const workspaceRootUri = dirname(folders[0].uri);
 				const workspaceFolderUri = extUri.resolvePath(workspaceRootUri, sourceFolderName);
 				if (workspaceFolderUri.fsPath.startsWith(folder.uri.fsPath)) {
 					result.push(workspaceFolderUri);