diff --git a/actions/setup/js/display_file_helpers.cjs b/actions/setup/js/display_file_helpers.cjs
index 01d5395a8f..d9af970c2e 100644
--- a/actions/setup/js/display_file_helpers.cjs
+++ b/actions/setup/js/display_file_helpers.cjs
@@ -116,7 +116,30 @@ function displayDirectories(directories, maxBytes = 64 * 1024) {
   core.startGroup("=== Listing All Gateway-Related Files ===");
 
   for (const dir of directories) {
-    displayDirectory(dir, maxBytes);
+    // Display directory header without creating a nested group
+    core.info(`📁 Directory: ${dir}`);
+
+    try {
+      if (!fs.existsSync(dir)) {
+        core.notice(`  Directory does not exist: ${dir}`);
+        continue;
+      }
+
+      const files = fs.readdirSync(dir);
+      if (files.length === 0) {
+        core.info("  (empty directory)");
+        continue;
+      }
+
+      // Display each file
+      for (const file of files) {
+        const filePath = `${dir}/${file}`;
+        displayFileContent(filePath, file, maxBytes);
+      }
+    } catch (/** @type {unknown} */ error) {
+      const errorMessage = error instanceof Error ? error.message : String(error);
+      core.error(`  Error reading directory ${dir}: ${errorMessage}`);
+    }
   }
 
   core.endGroup();
diff --git a/actions/setup/js/display_file_helpers.test.cjs b/actions/setup/js/display_file_helpers.test.cjs
index 683399b4f5..c9fc703709 100644
--- a/actions/setup/js/display_file_helpers.test.cjs
+++ b/actions/setup/js/display_file_helpers.test.cjs
@@ -439,10 +439,10 @@ describe("display_file_helpers", () => {
         // Check outer group was started
         expect(mockCore.startGroup).toHaveBeenCalledWith("=== Listing All Gateway-Related Files ===");
 
-        // Check both directories were displayed
-        const startGroupCalls = mockCore.startGroup.mock.calls.map(call => call[0]);
-        expect(startGroupCalls.some(call => call.includes(tmpDir1))).toBe(true);
-        expect(startGroupCalls.some(call => call.includes(tmpDir2))).toBe(true);
+        // Check both directories were displayed in info messages (not as separate groups)
+        const infoMessages = mockCore.info.mock.calls.map(call => call[0]).join("\n");
+        expect(infoMessages).toContain(`📁 Directory: ${tmpDir1}`);
+        expect(infoMessages).toContain(`📁 Directory: ${tmpDir2}`);
       } finally {
         delete global.core;
         fs.rmSync(tmpDir1, { recursive: true, force: true });
diff --git a/actions/setup/js/parse_mcp_gateway_log.test.cjs b/actions/setup/js/parse_mcp_gateway_log.test.cjs
index 0e7f930482..54f2415b5a 100644
--- a/actions/setup/js/parse_mcp_gateway_log.test.cjs
+++ b/actions/setup/js/parse_mcp_gateway_log.test.cjs
@@ -387,8 +387,8 @@ Some content here.`;
         // Check header group was started
         expect(allGroups).toContain("=== Listing All Gateway-Related Files ===");
 
-        // Check directories are listed
-        expect(allGroups).toContain("/tmp/gh-aw/mcp-logs");
+        // Check directories are listed in info messages (not as separate groups)
+        expect(allOutput).toContain("📁 Directory: /tmp/gh-aw/mcp-logs");
 
         // Check files are listed
         expect(allOutput).toContain("gateway.log");