diff --git a/autogpt_platform/backend/backend/blocks/io.py b/autogpt_platform/backend/backend/blocks/io.py
index 8b40c61fc8..a9c3859490 100644
--- a/autogpt_platform/backend/backend/blocks/io.py
+++ b/autogpt_platform/backend/backend/blocks/io.py
@@ -471,10 +471,8 @@ class AgentFileInputBlock(AgentInputBlock):
 
         # Determine return format based on user preference
         # for_external_api: always returns data URI (base64) - honors "Produce Base64 Output"
-        # for_local_processing: returns local file path
-        return_format = (
-            "for_external_api" if input_data.base_64 else "for_local_processing"
-        )
+        # for_block_output: smart format - workspace:// in CoPilot, data URI in graphs
+        return_format = "for_external_api" if input_data.base_64 else "for_block_output"
 
         yield "result", await store_media_file(
             file=input_data.value,
diff --git a/autogpt_platform/backend/backend/util/gcs_utils.py b/autogpt_platform/backend/backend/util/gcs_utils.py
index c8795ca0fd..3f91f21897 100644
--- a/autogpt_platform/backend/backend/util/gcs_utils.py
+++ b/autogpt_platform/backend/backend/util/gcs_utils.py
@@ -60,16 +60,21 @@ async def download_with_fresh_session(bucket: str, blob: str) -> bytes:
     session = aiohttp.ClientSession(
         connector=aiohttp.TCPConnector(limit=10, force_close=True)
     )
+    client: async_gcs_storage.Storage | None = None
     try:
         client = async_gcs_storage.Storage(session=session)
         content = await client.download(bucket, blob)
-        await client.close()
         return content
     except Exception as e:
         if "404" in str(e) or "Not Found" in str(e):
             raise FileNotFoundError(f"File not found: gcs://{bucket}/{blob}")
         raise
     finally:
+        if client:
+            try:
+                await client.close()
+            except Exception:
+                pass  # Best-effort cleanup
         await session.close()
 
 
diff --git a/autogpt_platform/backend/backend/util/workspace.py b/autogpt_platform/backend/backend/util/workspace.py
index 692c97e03e..a2f1a61b9e 100644
--- a/autogpt_platform/backend/backend/util/workspace.py
+++ b/autogpt_platform/backend/backend/util/workspace.py
@@ -196,13 +196,13 @@ class WorkspaceManager:
         # Resolve path with session prefix
         path = self._resolve_path(path)
 
-        # Check if file exists at path
-        existing = await get_workspace_file_by_path(self.workspace_id, path)
-        if existing is not None:
-            if overwrite:
-                # Delete existing file first
-                await self.delete_file(existing.id)
-            else:
+        # Check if file exists at path (only error for non-overwrite case)
+        # For overwrite=True, we let the write proceed and handle via UniqueViolationError
+        # This ensures the new file is written to storage BEFORE the old one is deleted,
+        # preventing data loss if the new write fails
+        if not overwrite:
+            existing = await get_workspace_file_by_path(self.workspace_id, path)
+            if existing is not None:
                 raise ValueError(f"File already exists at path: {path}")
 
         # Auto-detect MIME type if not provided