diff --git a/cli/src/commands/run.ts b/cli/src/commands/run.ts
index cfdd5ad6..d96b010c 100644
--- a/cli/src/commands/run.ts
+++ b/cli/src/commands/run.ts
@@ -64,41 +64,60 @@ export async function runCommand(opts: RunOptions): Promise<void> {
   await importServerEntry();
 }
 
+function formatError(err: unknown): string {
+  if (err instanceof Error) {
+    if (err.message && err.message.trim().length > 0) return err.message;
+    return err.name;
+  }
+  if (typeof err === "string") return err;
+  try {
+    return JSON.stringify(err);
+  } catch {
+    return String(err);
+  }
+}
+
+function isModuleNotFoundError(err: unknown): boolean {
+  if (!(err instanceof Error)) return false;
+  const code = (err as { code?: unknown }).code;
+  if (code === "ERR_MODULE_NOT_FOUND") return true;
+  return err.message.includes("Cannot find module");
+}
+
 async function importServerEntry(): Promise<void> {
   const projectRoot = path.resolve(path.dirname(fileURLToPath(import.meta.url)), "../../..");
   const fileCandidates = [
-    path.resolve(projectRoot, "server/dist/index.js"),
     path.resolve(projectRoot, "server/src/index.ts"),
+    path.resolve(projectRoot, "server/dist/index.js"),
   ];
+  const existingFileCandidates = fileCandidates.filter((filePath) => fs.existsSync(filePath));
+  if (existingFileCandidates.length > 0) {
+    for (const filePath of existingFileCandidates) {
+      try {
+        await import(pathToFileURL(filePath).href);
+        return;
+      } catch (err) {
+        throw new Error(`Failed to start Paperclip server from ${filePath}: ${formatError(err)}`);
+      }
+    }
+  }
 
-  const specifierCandidates: string[] = [
-    "@paperclipai/server/dist/index.js",
-    "@paperclipai/server/src/index.ts",
-  ];
-
-  const importErrors: string[] = [];
-
+  const specifierCandidates: string[] = ["@paperclipai/server/dist/index.js", "@paperclipai/server/src/index.ts"];
+  const missingErrors: string[] = [];
   for (const specifier of specifierCandidates) {
     try {
       await import(specifier);
       return;
     } catch (err) {
-      importErrors.push(`${specifier}: ${err instanceof Error ? err.message : String(err)}`);
-    }
-  }
-
-  for (const filePath of fileCandidates) {
-    if (!fs.existsSync(filePath)) continue;
-    try {
-      await import(pathToFileURL(filePath).href);
-      return;
-    } catch (err) {
-      importErrors.push(`${filePath}: ${err instanceof Error ? err.message : String(err)}`);
+      if (isModuleNotFoundError(err)) {
+        missingErrors.push(`${specifier}: ${formatError(err)}`);
+        continue;
+      }
+      throw new Error(`Failed to start Paperclip server from ${specifier}: ${formatError(err)}`);
     }
   }
 
   throw new Error(
-    `Could not start Paperclip server entrypoint. Tried: ${[...specifierCandidates, ...fileCandidates].join(", ")}\n` +
-      importErrors.join("\n"),
+    `Could not locate a Paperclip server entrypoint. Tried: ${[...fileCandidates, ...specifierCandidates].join(", ")}\n${missingErrors.join("\n")}`,
   );
 }
diff --git a/server/src/index.ts b/server/src/index.ts
index 2018db16..433b48b2 100644
--- a/server/src/index.ts
+++ b/server/src/index.ts
@@ -225,27 +225,14 @@ if (config.databaseUrl) {
   }
 
   const dataDir = resolve(config.embeddedPostgresDataDir);
-  const port = config.embeddedPostgresPort;
+  const configuredPort = config.embeddedPostgresPort;
+  let port = configuredPort;
 
   if (config.databaseMode === "postgres") {
     logger.warn("Database mode is postgres but no connection string was set; falling back to embedded PostgreSQL");
   }
 
-  logger.info(`No DATABASE_URL set — using embedded PostgreSQL (${dataDir}) on port ${port}`);
-  embeddedPostgres = new EmbeddedPostgres({
-    databaseDir: dataDir,
-    user: "paperclip",
-    password: "paperclip",
-    port,
-    persistent: true,
-  });
   const clusterVersionFile = resolve(dataDir, "PG_VERSION");
-  if (!existsSync(clusterVersionFile)) {
-    await embeddedPostgres.initialise();
-  } else {
-    logger.info(`Embedded PostgreSQL cluster already exists (${clusterVersionFile}); skipping init`);
-  }
-
   const postmasterPidFile = resolve(dataDir, "postmaster.pid");
   const isPidRunning = (pid: number): boolean => {
     try {
@@ -271,8 +258,31 @@ if (config.databaseUrl) {
 
   const runningPid = getRunningPid();
   if (runningPid) {
-    logger.warn({ pid: runningPid }, "Embedded PostgreSQL already running; reusing existing process");
+    logger.warn({ pid: runningPid, port }, "Embedded PostgreSQL already running; reusing existing process");
   } else {
+    const detectedPort = await detectPort(configuredPort);
+    if (detectedPort !== configuredPort) {
+      logger.warn(
+        { requestedPort: configuredPort, selectedPort: detectedPort },
+        "Embedded PostgreSQL port is in use; using next free port",
+      );
+    }
+    port = detectedPort;
+    logger.info(`No DATABASE_URL set — using embedded PostgreSQL (${dataDir}) on port ${port}`);
+    embeddedPostgres = new EmbeddedPostgres({
+      databaseDir: dataDir,
+      user: "paperclip",
+      password: "paperclip",
+      port,
+      persistent: true,
+    });
+
+    if (!existsSync(clusterVersionFile)) {
+      await embeddedPostgres.initialise();
+    } else {
+      logger.info(`Embedded PostgreSQL cluster already exists (${clusterVersionFile}); skipping init`);
+    }
+
     if (existsSync(postmasterPidFile)) {
       logger.warn("Removing stale embedded PostgreSQL lock file");
       rmSync(postmasterPidFile, { force: true });