diff --git a/src/Aspire.Cli/Projects/GuestAppHostProject.cs b/src/Aspire.Cli/Projects/GuestAppHostProject.cs
index 778a20ba35d..9f0f2b9f5e1 100644
--- a/src/Aspire.Cli/Projects/GuestAppHostProject.cs
+++ b/src/Aspire.Cli/Projects/GuestAppHostProject.cs
@@ -274,8 +274,8 @@ await GenerateCodeViaRpcAsync(
                 cancellationToken);
 
             // Step 5: Install dependencies using GuestRuntime (best effort - don't block code generation)
-            await InstallDependenciesAsync(directory, rpcClient, cancellationToken);
-            return true;
+            var result = await InstallDependenciesAsync(directory, rpcClient, cancellationToken);
+            return (result == 0);
         }
         finally
         {
diff --git a/src/Aspire.Cli/Templating/CliTemplateFactory.TypeScriptStarterTemplate.cs b/src/Aspire.Cli/Templating/CliTemplateFactory.TypeScriptStarterTemplate.cs
index f910e0c21e3..087bd48f1ce 100644
--- a/src/Aspire.Cli/Templating/CliTemplateFactory.TypeScriptStarterTemplate.cs
+++ b/src/Aspire.Cli/Templating/CliTemplateFactory.TypeScriptStarterTemplate.cs
@@ -76,6 +76,10 @@ private async Task<TemplateResult> ApplyTypeScriptStarterTemplateAsync(CallbackT
                     if (appHostProject is not IGuestAppHostSdkGenerator guestProject)
                     {
                         _interactionService.DisplayError("Automatic 'aspire restore' is unavailable for the new TypeScript starter project because no TypeScript AppHost SDK generator was found.");
+                        if (Directory.Exists(outputPath))
+                        {
+                            Directory.Delete(outputPath, true);
+                        }
                         return new TemplateResult(ExitCodeConstants.FailedToBuildArtifacts, outputPath);
                     }