diff --git a/host/src/builder/mod.rs b/host/src/builder/mod.rs
index bf54efb..b1c17e2 100644
--- a/host/src/builder/mod.rs
+++ b/host/src/builder/mod.rs
@@ -123,12 +123,15 @@ impl Builder {
             b"Signature: 8a477f597d28d172789f06886806bc55\n",
         )?;
         std::fs::write(base.join("last-used"), [])?;
-        let cwd = source.join(
-            world_cwd
-                .strip_prefix(&workspace)
-                .expect("workspace is an ancestor of cwd")
-                .trim_start_matches('/'),
-        );
+        let relative = world_cwd
+            .strip_prefix(&workspace)
+            .expect("workspace is an ancestor of cwd")
+            .trim_start_matches('/');
+        let cwd = if relative.is_empty() {
+            source.clone()
+        } else {
+            source.join(relative)
+        };
         let mut fetch = Command::new("cargo");
         if action == "add" {
             fetch.args(&request.argv).arg("--dry-run");
@@ -274,7 +277,6 @@ impl Builder {
                 }
             }
             let split = args.iter().position(|a| a == "--").unwrap_or(args.len());
-            cmd.args(&args[..split]);
             if action == "run" {
                 cmd.arg("--config").arg(format!(
                     "target.wasm32-wasip2.runner=[{:?},{:?}]",
@@ -282,6 +284,8 @@ impl Builder {
                     tools.join("run.nu")
                 ));
             }
+            // Keep all global config flags before the subcommand so Cargo retains them.
+            cmd.args(&args[..split]);
             if compiles {
                 cmd.args([
                     "--target",
diff --git a/host/src/process/http.rs b/host/src/process/http.rs
index 747f5ae..8772a84 100644
--- a/host/src/process/http.rs
+++ b/host/src/process/http.rs
@@ -49,7 +49,7 @@ impl WasiHttpHooks for Hooks {
                 if request.method() == http::Method::POST && request.uri().path() == "/cargo" {
                     return Ok((
                         crate::api::stream(&router, request),
-                        Box::new(async { Ok(()) }),
+                        Box::new(async { Ok(()) }) as Io,
                     ));
                 }
                 return Ok(response(crate::api::handle(&router, caller, request).await));
diff --git a/host/tests/builder.rs b/host/tests/builder.rs
index ef46819..019823a 100644
--- a/host/tests/builder.rs
+++ b/host/tests/builder.rs
@@ -171,7 +171,8 @@ async fn cargo_build_test_and_source_changes() -> anyhow::Result<()> {
     .await?;
     assert_eq!(code, 0, "{out}");
     assert!(out.contains("INTEGRATION_CASE"), "{out}");
-    let (code, out) = cargo(&runtime, &["test", "fail"]).await?;
+    // WASI aborts on panic, so disable capture to expose the panic message.
+    let (code, out) = cargo(&runtime, &["test", "fail", "--", "--nocapture"]).await?;
     assert_eq!(code, 101, "{out}");
     assert!(out.contains("intentional fixture failure"), "{out}");
     let (code, out) = cargo(&runtime, &["test", "--no-run"]).await?;
@@ -291,7 +292,7 @@ async fn timeout_and_cancellation() -> anyhow::Result<()> {
     std::fs::create_dir_all(&bin)?;
     std::fs::copy(binaries.join("cargo.wasm"), bin.join("cargo.wasm"))?;
     let runtime = Runtime::new(world)?;
-    let code = runtime
+    let error = runtime
         .exec(
             Command::Argv(vec!["/bin/cargo.wasm".into(), "build".into()]),
             Options {
@@ -301,10 +302,11 @@ async fn timeout_and_cancellation() -> anyhow::Result<()> {
             },
             &mut |_, _| {},
         )
-        .await?;
-    assert_ne!(code, 0);
+        .await
+        .unwrap_err();
+    assert!(error.to_string().contains("timed out"), "{error}");
     let (code, out) =
-        tokio::time::timeout(Duration::from_secs(5), cargo(&runtime, &["metadata"])).await??;
+        tokio::time::timeout(Duration::from_secs(20), cargo(&runtime, &["metadata"])).await??;
     assert_eq!(
         code, 0,
         "the canceled build still held the builder lock: {out}"