File/Directory change incorrectly reports conflict

VFS for Git is somehow changing the behavior of git merge when handling a directory->file change.

Here is a repro scenario:

$ git clone https://dev.azure.com/gvfs/ci/_git/ForTests ForTests-Git

$ cd ForTests-Git

$ git merge --no-ff origin/FunctionalTests_20200701_MergeConflict_FolderToFile
Removing Scripts/StopDevService.bat
Removing Scripts/StartDevService.bat
Removing Scripts/SetupDevService.bat
Adding Scripts
Merge made by the 'recursive' strategy.
 Scripts                     | 1 +
 Scripts/SetupDevService.bat | 4 ----
 Scripts/StartDevService.bat | 4 ----
 Scripts/StopDevService.bat  | 4 ----
 4 files changed, 1 insertion(+), 12 deletions(-)
 create mode 100644 Scripts
 delete mode 100644 Scripts/SetupDevService.bat
 delete mode 100644 Scripts/StartDevService.bat
 delete mode 100644 Scripts/StopDevService.bat

However, VFS for Git reports this as a conflict instead:

$ gvfs clone https://dev.azure.com/gvfs/ci/_git/ForTests ForTests-VFS

$ cd ForTests-VFS/src

$ git merge --no-ff origin/FunctionalTests_20200701_MergeConflict_FolderToFile
CONFLICT (directory/file): There is a directory with name Scripts in HEAD. Adding Scripts as Scripts~origin_FunctionalTests_20200701_MergeConflict_FolderToFile
Automatic merge failed; fix conflicts and then commit the result.

$ git status
On branch test
You have unmerged paths.
  (fix conflicts and run "git commit")
  (use "git merge --abort" to abort the merge)

Changes to be committed:
        deleted:    Scripts/SetupDevService.bat
        deleted:    Scripts/StartDevService.bat
        deleted:    Scripts/StopDevService.bat

Unmerged paths:
  (use "git add <file>..." to mark resolution)
        added by them:   Scripts

Untracked files:
  (use "git add <file>..." to include in what will be committed)
        Scripts~origin_FunctionalTests_20200701_MergeConflict_FolderToFile

Reproduce the directory-to-file merge using the ForTests repository and compare a standard git clone with a VFS for Git clone. Start with the shown git merge commands and status output; done means the VFS case matches Git's successful merge behavior without reporting an unresolved conflict.