diff --git a/src/harness/unittests/tsserverProjectSystem.ts b/src/harness/unittests/tsserverProjectSystem.ts
index 1b2aa481b26..66ebdcfaa14 100644
--- a/src/harness/unittests/tsserverProjectSystem.ts
+++ b/src/harness/unittests/tsserverProjectSystem.ts
@@ -1192,6 +1192,24 @@ namespace ts.projectSystem {
             checkNumberOfInferredProjects(projectService, 0);
         });
 
+        it("external project for dynamic file", () => {
+            const externalProjectName = "^ScriptDocument1 file1.ts";
+            const externalFiles = toExternalFiles(["^ScriptDocument1 file1.ts"]);
+            const host = createServerHost([]);
+            const projectService = createProjectService(host);
+            projectService.openExternalProject({
+                rootFiles: externalFiles,
+                options: {},
+                projectFileName: externalProjectName
+            });
+
+            checkNumberOfExternalProjects(projectService, 1);
+            checkNumberOfInferredProjects(projectService, 0);
+
+            externalFiles[0].content = "let x =1;";
+            projectService.applyChangesInOpenFiles(externalFiles, [], []);
+        });
+
         it("external project that included config files", () => {
             const file1 = {
                 path: "/a/b/f1.ts",
@@ -6390,4 +6408,76 @@ namespace ts.projectSystem {
             verifyWatchedDirectories(/*useProjectAtRoot*/ false);
         });
     });
+
+    describe("tsserverProjectSystem typingsInstaller on inferred Project", () => {
+        it("when projectRootPath is provided", () => {
+            const projects = "/users/username/projects";
+            const projectRootPath = `${projects}/san2`;
+            const file: FileOrFolder = {
+                path: `${projectRootPath}/x.js`,
+                content: "const aaaaaaav = 1;"
+            };
+
+            const currentDirectory = `${projects}/anotherProject`;
+            const packageJsonInCurrentDirectory: FileOrFolder = {
+                path: `${currentDirectory}/package.json`,
+                content: JSON.stringify({
+                    devDependencies: {
+                        pkgcurrentdirectory: ""
+                    },
+                })
+            };
+            const packageJsonOfPkgcurrentdirectory: FileOrFolder = {
+                path: `${currentDirectory}/node_modules/pkgcurrentdirectory/package.json`,
+                content: JSON.stringify({
+                    name: "pkgcurrentdirectory",
+                    main: "index.js",
+                    typings: "index.d.ts"
+                })
+            };
+            const indexOfPkgcurrentdirectory: FileOrFolder = {
+                path: `${currentDirectory}/node_modules/pkgcurrentdirectory/index.d.ts`,
+                content: "export function foo() { }"
+            };
+
+            const typingsCache = `/users/username/Library/Caches/typescript/2.7`;
+            const typingsCachePackageJson: FileOrFolder = {
+                path: `${typingsCache}/package.json`,
+                content: JSON.stringify({
+                    devDependencies: {
+                    },
+                })
+            };
+
+            const files = [file, packageJsonInCurrentDirectory, packageJsonOfPkgcurrentdirectory, indexOfPkgcurrentdirectory, typingsCachePackageJson];
+            const host = createServerHost(files, { currentDirectory });
+
+            const typesRegistry = createMap<void>();
+            typesRegistry.set("pkgcurrentdirectory", void 0);
+            const typingsInstaller = new TestTypingsInstaller(typingsCache, /*throttleLimit*/ 5, host, typesRegistry);
+
+            const projectService = createProjectService(host, { typingsInstaller });
+
+            projectService.setCompilerOptionsForInferredProjects({
+                module: ModuleKind.CommonJS,
+                target: ScriptTarget.ES2016,
+                jsx: JsxEmit.Preserve,
+                experimentalDecorators: true,
+                allowJs: true,
+                allowSyntheticDefaultImports: true,
+                allowNonTsExtensions: true
+            });
+
+            projectService.openClientFile(file.path, file.content, ScriptKind.JS, projectRootPath);
+
+            const project = projectService.inferredProjects[0];
+            assert.isDefined(project);
+
+            // Ensure that we use result from types cache when getting ls
+            assert.isDefined(project.getLanguageService());
+
+            // Verify that the pkgcurrentdirectory from the current directory isnt picked up
+            checkProjectActualFiles(project, [file.path]);
+        });
+    });
 }
diff --git a/src/harness/virtualFileSystemWithWatch.ts b/src/harness/virtualFileSystemWithWatch.ts
index 158e460780c..4db75c48386 100644
--- a/src/harness/virtualFileSystemWithWatch.ts
+++ b/src/harness/virtualFileSystemWithWatch.ts
@@ -539,7 +539,7 @@ namespace ts.TestFSWithWatch {
         }
 
         readDirectory(path: string, extensions?: ReadonlyArray<string>, exclude?: ReadonlyArray<string>, include?: ReadonlyArray<string>, depth?: number): string[] {
-            return ts.matchFiles(this.toNormalizedAbsolutePath(path), extensions, exclude, include, this.useCaseSensitiveFileNames, this.getCurrentDirectory(), depth, (dir) => {
+            return ts.matchFiles(path, extensions, exclude, include, this.useCaseSensitiveFileNames, this.getCurrentDirectory(), depth, (dir) => {
                 const directories: string[] = [];
                 const files: string[] = [];
                 const dirEntry = this.fs.get(this.toPath(dir));
diff --git a/src/server/editorServices.ts b/src/server/editorServices.ts
index b10ca156de1..e57becc76b9 100644
--- a/src/server/editorServices.ts
+++ b/src/server/editorServices.ts
@@ -1748,9 +1748,10 @@ namespace ts.server {
             const path = normalizedPathToPath(fileName, currentDirectory, this.toCanonicalFileName);
             let info = this.getScriptInfoForPath(path);
             if (!info) {
-                Debug.assert(isRootedDiskPath(fileName) || openedByClient, "Script info with relative file name can only be open script info");
-                Debug.assert(!isRootedDiskPath(fileName) || this.currentDirectory === currentDirectory || !this.openFilesWithNonRootedDiskPath.has(this.toCanonicalFileName(fileName)), "Open script files with non rooted disk path opened with current directory context cannot have same canonical names");
                 const isDynamic = isDynamicFileName(fileName);
+                Debug.assert(isRootedDiskPath(fileName) || isDynamic || openedByClient, "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nScript info with non-dynamic relative file name can only be open script info`);
+                Debug.assert(!isRootedDiskPath(fileName) || this.currentDirectory === currentDirectory || !this.openFilesWithNonRootedDiskPath.has(this.toCanonicalFileName(fileName)), "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nOpen script files with non rooted disk path opened with current directory context cannot have same canonical names`);
+                Debug.assert(!isDynamic || this.currentDirectory === currentDirectory, "", () => `${JSON.stringify({ fileName, currentDirectory, hostCurrentDirectory: this.currentDirectory, openKeys: arrayFrom(this.openFilesWithNonRootedDiskPath.keys()) })}\nDynamic files must always have current directory context since containing external project name will always match the script info name.`);
                 // If the file is not opened by client and the file doesnot exist on the disk, return
                 if (!openedByClient && !isDynamic && !(hostToQueryFileExistsOn || this.host).fileExists(fileName)) {
                     return;
diff --git a/src/server/utilities.ts b/src/server/utilities.ts
index 69399b672b3..55490fc112d 100644
--- a/src/server/utilities.ts
+++ b/src/server/utilities.ts
@@ -33,19 +33,6 @@ namespace ts.server {
         export type Types = Err | Info | Perf;
     }
 
-    function getProjectRootPath(project: Project): Path {
-        switch (project.projectKind) {
-            case ProjectKind.Configured:
-                return <Path>getDirectoryPath(project.getProjectName());
-            case ProjectKind.Inferred:
-                // TODO: fixme
-                return <Path>"";
-            case ProjectKind.External:
-                const projectName = normalizeSlashes(project.getProjectName());
-                return project.projectService.host.fileExists(projectName) ? <Path>getDirectoryPath(projectName) : <Path>projectName;
-        }
-    }
-
     export function createInstallTypingsRequest(project: Project, typeAcquisition: TypeAcquisition, unresolvedImports: SortedReadonlyArray<string>, cachePath?: string): DiscoverTypings {
         return {
             projectName: project.getProjectName(),
@@ -53,7 +40,7 @@ namespace ts.server {
             compilerOptions: project.getCompilationSettings(),
             typeAcquisition,
             unresolvedImports,
-            projectRootPath: getProjectRootPath(project),
+            projectRootPath: project.getCurrentDirectory() as Path,
             cachePath,
             kind: "discover"
         };