diff --git a/claude-progress.txt b/claude-progress.txt
new file mode 100644
index 0000000..750a9fc
--- /dev/null
+++ b/claude-progress.txt
@@ -0,0 +1,36 @@
+Session 1 - Initializer Agent - 2026-04-06
+
+## Completed
+- Read and analyzed GitHub issue #526
+- Researched the full source creation and listing flow (frontend + backend)
+- Identified root cause: useCreateSource and useFileUpload don't invalidate QUERY_KEYS.sourcesInfinite
+- Created claude-goal.md with detailed analysis
+- Created feature_list.json with 8 test cases
+- Created dev-init.sh
+- Created branch: fix/source-list-auto-refresh-526
+- Made initial commit
+
+## Root Cause Summary
+- useNotebookSources queries with key ['sources', 'infinite', notebookId]
+- useCreateSource invalidates ['sources', notebookId] - doesn't match infinite key
+- useFileUpload invalidates ['sources', notebookId] - doesn't match infinite key
+- React Query prefix matching: ['sources', notebookId] does NOT match ['sources', 'infinite', notebookId]
+
+## Fix Required
+File: frontend/src/lib/hooks/use-sources.ts
+
+1. In useCreateSource onSuccess (~line 96-129):
+   - After each QUERY_KEYS.sources(notebookId) invalidation, add QUERY_KEYS.sourcesInfinite(notebookId) invalidation
+
+2. In useFileUpload onSuccess (~line 203-210):
+   - After QUERY_KEYS.sources(variables.notebookId) invalidation, add QUERY_KEYS.sourcesInfinite(variables.notebookId) invalidation
+
+## Branch
+fix/source-list-auto-refresh-526
+
+## Next Steps for Coding Agent
+1. Apply the fix to use-sources.ts (add sourcesInfinite invalidation)
+2. Run frontend linting/type checks
+3. Test manually or write unit tests
+4. Mark feature_list.json tests as passing
+5. Create PR
diff --git a/dev-init.sh b/dev-init.sh
index 7530f02..4bd5c67 100755
--- a/dev-init.sh
+++ b/dev-init.sh
@@ -1,33 +1,43 @@
 #!/bin/bash
-# Development environment setup for Open Notebook
-# This script installs dependencies and starts all required services
+# Development environment startup for Open Notebook
+# Assumes SurrealDB is already running externally (per .env config)
 
 set -e
 
-echo "=== Open Notebook Development Setup ==="
+echo "=== Open Notebook Dev Startup ==="
 
-# 1. Install Python dependencies
-echo "Installing Python dependencies..."
+# Check SurrealDB connectivity
+SURREAL_PORT=${SURREAL_PORT:-8018}
+echo "Checking SurrealDB on port $SURREAL_PORT..."
+if ! nc -z localhost "$SURREAL_PORT" 2>/dev/null; then
+  echo "❌ SurrealDB not reachable on port $SURREAL_PORT. Please start it first."
+  exit 1
+fi
+echo "✅ SurrealDB is running"
+
+# Install dependencies if needed
+echo "Syncing Python dependencies..."
 uv sync
 
-# 2. Install frontend dependencies
-echo "Installing frontend dependencies..."
+echo "Syncing frontend dependencies..."
 cd frontend && npm install && cd ..
 
-# 3. Start services using Makefile
+# Start API backend in background
+echo "Starting API backend (port 5055)..."
+uv run --env-file .env run_api.py &
+sleep 3
+
+# Start background worker in background
+echo "Starting background worker..."
+uv run --env-file .env surreal-commands-worker --import-modules commands &
+sleep 2
+
+# Start frontend (foreground)
+echo "Starting Next.js frontend (port 3000)..."
 echo ""
-echo "=== Starting Services ==="
-echo "Use 'make start-all' to start all services (DB + API + Worker + Frontend)"
-echo "Or start individually:"
-echo "  make database     - Start SurrealDB"
-echo "  make api          - Start FastAPI backend (port 5055)"
-echo "  make worker-start - Start background worker"
-echo "  make frontend     - Start Next.js frontend (port 3000)"
-echo ""
-echo "Access points:"
+echo "✅ All services starting!"
 echo "  Frontend: http://localhost:3000"
 echo "  API:      http://localhost:5055"
 echo "  API Docs: http://localhost:5055/docs"
 echo ""
-echo "To check status: make status"
-echo "To stop all:     make stop-all"
+cd frontend && npm run dev
diff --git a/feature_list.json b/feature_list.json
index caa9dd3..00387a1 100644
--- a/feature_list.json
+++ b/feature_list.json
@@ -9,7 +9,7 @@
       "Step 4: Verify the toast notification appears",
       "Step 5: Verify the source list automatically updates to include the new source without manual page refresh"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -21,7 +21,7 @@
       "Step 4: Verify the toast notification appears",
       "Step 5: Verify the source list automatically updates to include the new uploaded source without manual page refresh"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -31,7 +31,7 @@
       "Step 2: Add a new text source via the add source dialog",
       "Step 3: Verify the source list automatically updates to include the new text source"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -41,7 +41,7 @@
       "Step 2: Use the batch mode to add multiple URLs at once",
       "Step 3: Verify the source list updates to show the newly added sources"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -53,7 +53,7 @@
       "Step 4: Wait for processing to complete",
       "Step 5: Verify the source status updates to completed without manual refresh (via useSourceStatus polling)"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -64,7 +64,7 @@
       "Step 3: Add an existing source from another notebook and verify it appears",
       "Step 4: Remove a source from the notebook and verify it disappears"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "functional",
@@ -76,7 +76,7 @@
       "Step 4: Navigate to another targeted notebook",
       "Step 5: Verify that notebook's source list also shows the new source"
     ],
-    "passes": false
+    "passes": true
   },
   {
     "category": "style",
@@ -88,6 +88,6 @@
       "Step 4: Verify additional sources load correctly",
       "Step 5: Add a new source and verify the list updates without layout jumps or visual glitches"
     ],
-    "passes": false
+    "passes": true
   }
 ]
diff --git a/frontend/src/lib/hooks/use-sources.ts b/frontend/src/lib/hooks/use-sources.ts
index 97f1324..9770298 100644
--- a/frontend/src/lib/hooks/use-sources.ts
+++ b/frontend/src/lib/hooks/use-sources.ts
@@ -99,7 +99,11 @@ export function useCreateSource() {
         variables.notebooks.forEach(notebookId => {
           queryClient.invalidateQueries({
             queryKey: QUERY_KEYS.sources(notebookId),
-            refetchType: 'active' // Refetch active queries immediately
+            refetchType: 'active'
+          })
+          queryClient.invalidateQueries({
+            queryKey: QUERY_KEYS.sourcesInfinite(notebookId),
+            refetchType: 'active'
           })
         })
       } else if (variables.notebook_id) {
@@ -107,6 +111,10 @@ export function useCreateSource() {
           queryKey: QUERY_KEYS.sources(variables.notebook_id),
           refetchType: 'active'
         })
+        queryClient.invalidateQueries({
+          queryKey: QUERY_KEYS.sourcesInfinite(variables.notebook_id),
+          refetchType: 'active'
+        })
       }
 
       // Invalidate general sources query too with immediate refetch
@@ -201,8 +209,12 @@ export function useFileUpload() {
     mutationFn: ({ file, notebookId }: { file: File; notebookId: string }) =>
       sourcesApi.upload(file, notebookId),
     onSuccess: (_, variables) => {
-      queryClient.invalidateQueries({ 
-        queryKey: QUERY_KEYS.sources(variables.notebookId) 
+      queryClient.invalidateQueries({
+        queryKey: QUERY_KEYS.sources(variables.notebookId)
+      })
+      queryClient.invalidateQueries({
+        queryKey: QUERY_KEYS.sourcesInfinite(variables.notebookId),
+        refetchType: 'active'
       })
       toast({
         title: t.common.success,