diff --git a/actions/setup/js/interpolate_prompt.cjs b/actions/setup/js/interpolate_prompt.cjs
index a3a183b145..1484c8beef 100644
--- a/actions/setup/js/interpolate_prompt.cjs
+++ b/actions/setup/js/interpolate_prompt.cjs
@@ -17,14 +17,29 @@ const { getErrorMessage } = require("./error_helpers.cjs");
  * @returns {string} - The interpolated content
  */
 function interpolateVariables(content, variables) {
+  core.info(`[interpolateVariables] Starting interpolation with ${Object.keys(variables).length} variables`);
+  core.info(`[interpolateVariables] Content length: ${content.length} characters`);
+
   let result = content;
+  let totalReplacements = 0;
 
   // Replace each ${VAR_NAME} with its corresponding value
   for (const [varName, value] of Object.entries(variables)) {
     const pattern = new RegExp(`\\$\\{${varName}\\}`, "g");
-    result = result.replace(pattern, value);
+    const matches = (content.match(pattern) || []).length;
+
+    if (matches > 0) {
+      core.info(`[interpolateVariables] Replacing ${varName} (${matches} occurrence(s))`);
+      core.info(`[interpolateVariables]   Value: ${value.substring(0, 100)}${value.length > 100 ? "..." : ""}`);
+      result = result.replace(pattern, value);
+      totalReplacements += matches;
+    } else {
+      core.info(`[interpolateVariables] Variable ${varName} not found in content (unused)`);
+    }
   }
 
+  core.info(`[interpolateVariables] Completed: ${totalReplacements} total replacement(s)`);
+  core.info(`[interpolateVariables] Result length: ${result.length} characters`);
   return result;
 }
 
@@ -37,24 +52,81 @@ function interpolateVariables(content, variables) {
  * @returns {string} - The processed markdown content
  */
 function renderMarkdownTemplate(markdown) {
+  core.info(`[renderMarkdownTemplate] Starting template rendering`);
+  core.info(`[renderMarkdownTemplate] Input length: ${markdown.length} characters`);
+
+  // Count conditionals before processing
+  const blockConditionals = (markdown.match(/(\n?)([ \t]*{{#if\s+([^}]*)}}[ \t]*\n)([\s\S]*?)([ \t]*{{\/if}}[ \t]*)(\n?)/g) || []).length;
+  const inlineConditionals = (markdown.match(/{{#if\s+([^}]*)}}([\s\S]*?){{\/if}}/g) || []).length - blockConditionals;
+
+  core.info(`[renderMarkdownTemplate] Found ${blockConditionals} block conditional(s) and ${inlineConditionals} inline conditional(s)`);
+
+  let blockCount = 0;
+  let keptBlocks = 0;
+  let removedBlocks = 0;
+
   // First pass: Handle blocks where tags are on their own lines
   // Captures: (leading newline)(opening tag line)(condition)(body)(closing tag line)(trailing newline)
   let result = markdown.replace(/(\n?)([ \t]*{{#if\s+([^}]*)}}[ \t]*\n)([\s\S]*?)([ \t]*{{\/if}}[ \t]*)(\n?)/g, (match, leadNL, openLine, cond, body, closeLine, trailNL) => {
-    if (isTruthy(cond)) {
+    blockCount++;
+    const condTrimmed = cond.trim();
+    const truthyResult = isTruthy(cond);
+    const bodyPreview = body.substring(0, 60).replace(/\n/g, "\\n");
+
+    core.info(`[renderMarkdownTemplate] Block ${blockCount}: condition="${condTrimmed}" -> ${truthyResult ? "KEEP" : "REMOVE"}`);
+    core.info(`[renderMarkdownTemplate]   Body preview: "${bodyPreview}${body.length > 60 ? "..." : ""}"`);
+
+    if (truthyResult) {
       // Keep body with leading newline if there was one before the opening tag
+      keptBlocks++;
+      core.info(`[renderMarkdownTemplate]   Action: Keeping body with leading newline=${!!leadNL}`);
       return leadNL + body;
     } else {
       // Remove entire block completely - the line containing the template is removed
+      removedBlocks++;
+      core.info(`[renderMarkdownTemplate]   Action: Removing entire block`);
       return "";
     }
   });
 
+  core.info(`[renderMarkdownTemplate] First pass complete: ${keptBlocks} kept, ${removedBlocks} removed`);
+
+  let inlineCount = 0;
+  let keptInline = 0;
+  let removedInline = 0;
+
   // Second pass: Handle inline conditionals (tags not on their own lines)
-  result = result.replace(/{{#if\s+([^}]*)}}([\s\S]*?){{\/if}}/g, (_, cond, body) => (isTruthy(cond) ? body : ""));
+  result = result.replace(/{{#if\s+([^}]*)}}([\s\S]*?){{\/if}}/g, (_, cond, body) => {
+    inlineCount++;
+    const condTrimmed = cond.trim();
+    const truthyResult = isTruthy(cond);
+    const bodyPreview = body.substring(0, 40).replace(/\n/g, "\\n");
+
+    core.info(`[renderMarkdownTemplate] Inline ${inlineCount}: condition="${condTrimmed}" -> ${truthyResult ? "KEEP" : "REMOVE"}`);
+    core.info(`[renderMarkdownTemplate]   Body preview: "${bodyPreview}${body.length > 40 ? "..." : ""}"`);
+
+    if (truthyResult) {
+      keptInline++;
+      return body;
+    } else {
+      removedInline++;
+      return "";
+    }
+  });
+
+  core.info(`[renderMarkdownTemplate] Second pass complete: ${keptInline} kept, ${removedInline} removed`);
 
   // Clean up excessive blank lines (more than one blank line = 2 newlines)
+  const beforeCleanup = result.length;
+  const excessiveLines = (result.match(/\n{3,}/g) || []).length;
   result = result.replace(/\n{3,}/g, "\n\n");
 
+  if (excessiveLines > 0) {
+    core.info(`[renderMarkdownTemplate] Cleaned up ${excessiveLines} excessive blank line sequence(s)`);
+    core.info(`[renderMarkdownTemplate] Length change from cleanup: ${beforeCleanup} -> ${result.length} characters`);
+  }
+  core.info(`[renderMarkdownTemplate] Final output length: ${result.length} characters`);
+
   return result;
 }
 
@@ -63,11 +135,16 @@ function renderMarkdownTemplate(markdown) {
  */
 async function main() {
   try {
+    core.info("========================================");
+    core.info("[main] Starting interpolate_prompt processing");
+    core.info("========================================");
+
     const promptPath = process.env.GH_AW_PROMPT;
     if (!promptPath) {
       core.setFailed("GH_AW_PROMPT environment variable is not set");
       return;
     }
+    core.info(`[main] Prompt path: ${promptPath}`);
 
     // Get the workspace directory for runtime imports
     const workspaceDir = process.env.GITHUB_WORKSPACE;
@@ -75,21 +152,41 @@ async function main() {
       core.setFailed("GITHUB_WORKSPACE environment variable is not set");
       return;
     }
+    core.info(`[main] Workspace directory: ${workspaceDir}`);
 
     // Read the prompt file
+    core.info(`[main] Reading prompt file...`);
     let content = fs.readFileSync(promptPath, "utf8");
+    const originalLength = content.length;
+    core.info(`[main] Original content length: ${originalLength} characters`);
+    core.info(`[main] First 200 characters: ${content.substring(0, 200).replace(/\n/g, "\\n")}`);
 
     // Step 1: Process runtime imports (files and URLs)
+    core.info("\n========================================");
+    core.info("[main] STEP 1: Runtime Imports");
+    core.info("========================================");
     const hasRuntimeImports = /{{#runtime-import\??[ \t]+[^\}]+}}/.test(content);
     if (hasRuntimeImports) {
-      core.info("Processing runtime import macros (files and URLs)");
+      const importMatches = content.match(/{{#runtime-import\??[ \t]+[^\}]+}}/g) || [];
+      core.info(`Processing ${importMatches.length} runtime import macro(s) (files and URLs)`);
+      importMatches.forEach((match, i) => {
+        core.info(`  Import ${i + 1}: ${match.substring(0, 80)}${match.length > 80 ? "..." : ""}`);
+      });
+
+      const beforeImports = content.length;
       content = await processRuntimeImports(content, workspaceDir);
-      core.info("Runtime imports processed successfully");
+      const afterImports = content.length;
+
+      core.info(`Runtime imports processed successfully`);
+      core.info(`Content length change: ${beforeImports} -> ${afterImports} (${afterImports > beforeImports ? "+" : ""}${afterImports - beforeImports})`);
     } else {
       core.info("No runtime import macros found, skipping runtime import processing");
     }
 
     // Step 2: Interpolate variables
+    core.info("\n========================================");
+    core.info("[main] STEP 2: Variable Interpolation");
+    core.info("========================================");
     /** @type {Record<string, string>} */
     const variables = {};
     for (const [key, value] of Object.entries(process.env)) {
@@ -100,26 +197,65 @@ async function main() {
 
     const varCount = Object.keys(variables).length;
     if (varCount > 0) {
-      core.info(`Found ${varCount} expression variable(s) to interpolate`);
+      core.info(`Found ${varCount} expression variable(s) to interpolate:`);
+      for (const [key, value] of Object.entries(variables)) {
+        const preview = value.substring(0, 60);
+        core.info(`  ${key}: ${preview}${value.length > 60 ? "..." : ""}`);
+      }
+
+      const beforeInterpolation = content.length;
       content = interpolateVariables(content, variables);
+      const afterInterpolation = content.length;
+
       core.info(`Successfully interpolated ${varCount} variable(s) in prompt`);
+      core.info(`Content length change: ${beforeInterpolation} -> ${afterInterpolation} (${afterInterpolation > beforeInterpolation ? "+" : ""}${afterInterpolation - beforeInterpolation})`);
     } else {
       core.info("No expression variables found, skipping interpolation");
     }
 
     // Step 3: Render template conditionals
+    core.info("\n========================================");
+    core.info("[main] STEP 3: Template Rendering");
+    core.info("========================================");
     const hasConditionals = /{{#if\s+[^}]+}}/.test(content);
     if (hasConditionals) {
-      core.info("Processing conditional template blocks");
+      const conditionalMatches = content.match(/{{#if\s+[^}]+}}/g) || [];
+      core.info(`Processing ${conditionalMatches.length} conditional template block(s)`);
+
+      const beforeRendering = content.length;
       content = renderMarkdownTemplate(content);
-      core.info("Template rendered successfully");
+      const afterRendering = content.length;
+
+      core.info(`Template rendered successfully`);
+      core.info(`Content length change: ${beforeRendering} -> ${afterRendering} (${afterRendering > beforeRendering ? "+" : ""}${afterRendering - beforeRendering})`);
     } else {
       core.info("No conditional blocks found in prompt, skipping template rendering");
     }
 
     // Write back to the same file
+    core.info("\n========================================");
+    core.info("[main] STEP 4: Writing Output");
+    core.info("========================================");
+    core.info(`Writing processed content back to: ${promptPath}`);
+    core.info(`Final content length: ${content.length} characters`);
+    core.info(`Total length change: ${originalLength} -> ${content.length} (${content.length > originalLength ? "+" : ""}${content.length - originalLength})`);
+
     fs.writeFileSync(promptPath, content, "utf8");
+
+    core.info(`Last 200 characters: ${content.substring(Math.max(0, content.length - 200)).replace(/\n/g, "\\n")}`);
+    core.info("========================================");
+    core.info("[main] Processing complete - SUCCESS");
+    core.info("========================================");
   } catch (error) {
+    core.info("========================================");
+    core.info("[main] Processing failed - ERROR");
+    core.info("========================================");
+    const err = error instanceof Error ? error : new Error(String(error));
+    core.info(`[main] Error type: ${err.constructor.name}`);
+    core.info(`[main] Error message: ${err.message}`);
+    if (err.stack) {
+      core.info(`[main] Stack trace:\n${err.stack}`);
+    }
     core.setFailed(getErrorMessage(error));
   }
 }
diff --git a/actions/setup/js/interpolate_prompt_additional.test.cjs b/actions/setup/js/interpolate_prompt_additional.test.cjs
index 881e6662d5..8e39517db2 100644
--- a/actions/setup/js/interpolate_prompt_additional.test.cjs
+++ b/actions/setup/js/interpolate_prompt_additional.test.cjs
@@ -1,10 +1,12 @@
-import { describe, it, expect } from "vitest";
+import { describe, it, expect, vi } from "vitest";
 import fs from "fs";
 import path from "path";
 import { fileURLToPath } from "url";
 const __filename = fileURLToPath(import.meta.url),
   __dirname = path.dirname(__filename),
-  { isTruthy } = require("./is_truthy.cjs"),
+  core = { info: vi.fn(), setFailed: vi.fn() };
+global.core = core;
+const { isTruthy } = require("./is_truthy.cjs"),
   interpolatePromptScript = fs.readFileSync(path.join(__dirname, "interpolate_prompt.cjs"), "utf8"),
   renderMarkdownTemplateMatch = interpolatePromptScript.match(/function renderMarkdownTemplate\(markdown\)\s*{[\s\S]*?return result;[\s\S]*?}/);
 if (!renderMarkdownTemplateMatch) throw new Error("Could not extract renderMarkdownTemplate function from interpolate_prompt.cjs");