Don't treat muted reports as unread in LHN

src/components/LHNOptionsList/OptionRowLHN.tsx

@@ -57,18 +57,17 @@ function OptionRowLHN({reportID, isFocused = false, onSelectRow = () => {}, opti
         return null;
     }
 
+    const isInFocusMode = viewMode === CONST.OPTION_MODE.COMPACT;
     const textStyle = isFocused ? styles.sidebarLinkActiveText : styles.sidebarLinkText;
-    const textUnreadStyle = optionItem?.isUnread ? [textStyle, styles.sidebarLinkTextBold] : [textStyle];
+    const textUnreadStyle = optionItem?.isUnread && optionItem.notificationPreference !== CONST.REPORT.NOTIFICATION_PREFERENCE.MUTE ? [textStyle, styles.sidebarLinkTextBold] : [textStyle];
     const displayNameStyle = [styles.optionDisplayName, styles.optionDisplayNameCompact, styles.pre, textUnreadStyle, style];
-    const alternateTextStyle =
-        viewMode === CONST.OPTION_MODE.COMPACT
-            ? [textStyle, styles.optionAlternateText, styles.pre, styles.textLabelSupporting, styles.optionAlternateTextCompact, styles.ml2, style]
-            : [textStyle, styles.optionAlternateText, styles.pre, styles.textLabelSupporting, style];
+    const alternateTextStyle = isInFocusMode
+        ? [textStyle, styles.optionAlternateText, styles.pre, styles.textLabelSupporting, styles.optionAlternateTextCompact, styles.ml2, style]
+        : [textStyle, styles.optionAlternateText, styles.pre, styles.textLabelSupporting, style];
 
-    const contentContainerStyles =
-        viewMode === CONST.OPTION_MODE.COMPACT ? [styles.flex1, styles.flexRow, styles.overflowHidden, StyleUtils.getCompactContentContainerStyles()] : [styles.flex1];
+    const contentContainerStyles = isInFocusMode ? [styles.flex1, styles.flexRow, styles.overflowHidden, StyleUtils.getCompactContentContainerStyles()] : [styles.flex1];
     const sidebarInnerRowStyle = StyleSheet.flatten<ViewStyle>(
-        viewMode === CONST.OPTION_MODE.COMPACT
+        isInFocusMode
             ? [styles.chatLinkRowPressable, styles.flexGrow1, styles.optionItemAvatarNameWrapper, styles.optionRowCompact, styles.justifyContentCenter]
             : [styles.chatLinkRowPressable, styles.flexGrow1, styles.optionItemAvatarNameWrapper, styles.optionRow, styles.justifyContentCenter],
     );
@@ -175,13 +174,13 @@ function OptionRowLHN({reportID, isFocused = false, onSelectRow = () => {}, opti
                                             backgroundColor={hovered && !isFocused ? hoveredBackgroundColor : subscriptAvatarBorderColor}
                                             mainAvatar={optionItem.icons?.[0]}
                                             secondaryAvatar={optionItem.icons?.[1]}
-                                            size={viewMode === CONST.OPTION_MODE.COMPACT ? CONST.AVATAR_SIZE.SMALL : CONST.AVATAR_SIZE.DEFAULT}
+                                            size={isInFocusMode ? CONST.AVATAR_SIZE.SMALL : CONST.AVATAR_SIZE.DEFAULT}
                                         />
                                     ) : (
                                         <MultipleAvatars
                                             icons={optionItem.icons ?? []}
-                                            isFocusMode={viewMode === CONST.OPTION_MODE.COMPACT}
-                                            size={viewMode === CONST.OPTION_MODE.COMPACT ? CONST.AVATAR_SIZE.SMALL : CONST.AVATAR_SIZE.DEFAULT}
+                                            isFocusMode={isInFocusMode}
+                                            size={isInFocusMode ? CONST.AVATAR_SIZE.SMALL : CONST.AVATAR_SIZE.DEFAULT}
                                             secondAvatarStyle={[
                                                 StyleUtils.getBackgroundAndBorderStyle(theme.sidebar),
                                                 isFocused ? StyleUtils.getBackgroundAndBorderStyle(focusedBackgroundColor) : undefined,

src/libs/ReportUtils.ts

@@ -397,6 +397,7 @@ type OptionData = {
     parentReportAction?: OnyxEntry<ReportAction>;
     displayNamesWithTooltips?: DisplayNameWithTooltips | null;
     descriptiveText?: string;
+    notificationPreference?: NotificationPreference | null;
     isDisabled?: boolean | null;
     name?: string | null;
 } & Report;
@@ -3707,7 +3708,7 @@ function shouldReportBeInOptionList({
 
     // All unread chats (even archived ones) in GSD mode will be shown. This is because GSD mode is specifically for focusing the user on the most relevant chats, primarily, the unread ones
     if (isInGSDMode) {
-        return isUnread(report);
+        return isUnread(report) && report.notificationPreference !== CONST.REPORT.NOTIFICATION_PREFERENCE.MUTE;
     }
 
     // Archived reports should always be shown when in default (most recent) mode. This is because you should still be able to access and search for the chats to find them.

src/libs/SidebarUtils.ts

@@ -147,6 +147,7 @@ function getOrderedReportIDs(
     const isInGSDMode = priorityMode === CONST.PRIORITY_MODE.GSD;
     const isInDefaultMode = !isInGSDMode;
     const allReportsDictValues = Object.values(allReports);
+
     // Filter out all the reports that shouldn't be displayed
     let reportsToDisplay = allReportsDictValues.filter((report) => {
         const parentReportActionsKey = `${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${report?.parentReportID}`;

src/libs/UnreadIndicatorUpdater/index.ts

@@ -26,8 +26,12 @@ export default function getUnreadReportsForUnreadIndicator(reports: OnyxCollecti
              * Chats with hidden preference remain invisible in the LHN and are not considered "unread."
              * They are excluded from the LHN rendering, but not filtered from the "option list."
              * This ensures they appear in Search, but not in the LHN or unread count.
+             *
+             * Furthermore, muted reports may or may not appear in the LHN depending on priority mode,
+             * but they should not be considered in the unread indicator count.
              */
-            report?.notificationPreference !== CONST.REPORT.NOTIFICATION_PREFERENCE.HIDDEN,
+            report?.notificationPreference !== CONST.REPORT.NOTIFICATION_PREFERENCE.HIDDEN &&
+            report?.notificationPreference !== CONST.REPORT.NOTIFICATION_PREFERENCE.MUTE,
     );
 }
 

src/pages/home/sidebar/SidebarLinksData.js

@@ -14,6 +14,7 @@ import useLocalize from '@hooks/useLocalize';
 import usePrevious from '@hooks/usePrevious';
 import useThemeStyles from '@hooks/useThemeStyles';
 import compose from '@libs/compose';
+import * as ReportUtils from '@libs/ReportUtils';
 import SidebarUtils from '@libs/SidebarUtils';
 import reportPropTypes from '@pages/reportPropTypes';
 import CONST from '@src/CONST';
@@ -172,6 +173,7 @@ const chatReportSelector = (report) =>
         hasDraft: report.hasDraft,
         isPinned: report.isPinned,
         isHidden: report.isHidden,
+        notificationPreference: report.notificationPreference,
         errorFields: {
             addWorkspaceRoom: report.errorFields && report.errorFields.addWorkspaceRoom,
         },
@@ -201,6 +203,7 @@ const chatReportSelector = (report) =>
         parentReportActionID: report.parentReportActionID,
         parentReportID: report.parentReportID,
         isDeletedParentAction: report.isDeletedParentAction,
+        isUnreadWithMention: ReportUtils.isUnreadWithMention(report),
     };
 
 /**