I am using Hg to manage and merge code with three other developers involved in a VS2008 project. We do have an .hgignore file that ignores a fair number of files not necessary to track, such as *.pdb, *.obj, etc. However, we do track .csproj files.

Periodically, it would seem that files go missing after a merge. We would get build issues, and have to relocate files which were in the project folders, but not in the csproj file.

Eventually, I noted during a merge conflict that sometimes Hg seems to merge incorrectly. Here's a screenshot below. The actual conflict that requires manual intervention is lower in the file. But in this section, hg incorrectly replaces DirectoryTasks.cs with a new, different file called ReportTasks.cs, when in fact, both should be added. How do people manage to avoid this?