diff --git a/package.json b/package.json
index 3c7cb5375..3f7c9e761 100644
--- a/package.json
+++ b/package.json
@@ -61,10 +61,10 @@
   },
   "dependencies": {
     "@anthropic-ai/claude-agent-sdk": "^0.3.142",
-    "@anthropic-ai/sdk": "^0.100.1",
+    "@anthropic-ai/sdk": "^0.102.0",
     "@clack/prompts": "^1.2.0",
     "dotenv": "^17.4.2",
-    "iii-sdk": "0.11.2",
+    "iii-sdk": "0.19.0",
     "zod": "^4.0.0"
   },
   "optionalDependencies": {
@@ -76,7 +76,7 @@
   },
   "devDependencies": {
     "@types/node": "^25.9.1",
-    "tsdown": "^0.21.10",
+    "tsdown": "^0.22.2",
     "tsx": "^4.19.0",
     "typescript": "^6.0.3",
     "vitest": "^4.1.6"
diff --git a/src/functions/compress-synthetic.ts b/src/functions/compress-synthetic.ts
index 28d17e979..30605bca1 100644
--- a/src/functions/compress-synthetic.ts
+++ b/src/functions/compress-synthetic.ts
@@ -26,6 +26,21 @@ function inferType(
     .replace(/([a-z])([A-Z])/g, "$1_$2")
     .replace(/[-\s]+/g, "_")
     .toLowerCase();
+  // Recognize conversation-shaped tool names. Several integrations
+  // (notably the Hermes plugin) use tool_name: "conversation" as a
+  // generic catch-all for user/assistant turns. Without this branch the
+  // synthetic compressor stores the observation as type "other" with a
+  // title that is the literal string "conversation", which then renders in
+  // the memory-context block as `- [other] conversation: <narrative>`.
+  if (
+    n === "conversation" ||
+    n === "chat" ||
+    n === "prompt" ||
+    n === "message" ||
+    n === "turn"
+  ) {
+    return "conversation";
+  }
   const hasWord = (word: string) =>
     new RegExp(`(^|_)${word}(_|$)`).test(n) ||
     n === word ||
@@ -34,13 +49,13 @@ function inferType(
   if (["fetch", "http", "web"].some(hasWord)) return "web_fetch";
   if (["grep", "search", "glob", "find"].some(hasWord)) return "search";
   if (["bash", "shell", "exec", "run"].some(hasWord)) return "command_run";
-  if (["edit", "update", "patch", "replace"].some(hasWord)) return "file_edit";
+  if (["edit", "update", "patch", "replace"].some(hasWord))
+    return "file_edit";
   if (["write", "create"].some(hasWord)) return "file_write";
   if (["read", "view"].some(hasWord)) return "file_read";
   if (["task", "agent"].some(hasWord)) return "subagent";
   return "other";
 }
-
 function extractFiles(input: unknown): string[] {
   if (!input || typeof input !== "object") return [];
   const o = input as Record<string, unknown>;
@@ -90,7 +105,21 @@ export function buildSyntheticCompression(
     sessionId: raw.sessionId,
     timestamp: raw.timestamp,
     type: inferType(toolName, raw.hookType),
-    title: truncate(toolName || "observation", 80),
+    // For generic tool names ("conversation", "other", "observation",
+    // "tool") fall back to deriving a descriptive title from the user
+    // prompt or the tool input. Without this, a tool_name of
+    // "conversation" produces a title that is the literal string
+    // "conversation" — useless in the rendered memory-context block.
+    title:
+      toolName &&
+      !["conversation", "other", "observation", "tool"].includes(
+        toolName.toLowerCase(),
+      )
+        ? truncate(toolName, 80)
+        : truncate(
+            promptStr || inputStr || "observation",
+            80,
+          ),
     subtitle: inputStr ? truncate(inputStr, 120) : undefined,
     facts: [],
     narrative: truncate(narrativeParts.join(" | "), 400),
diff --git a/src/functions/context.ts b/src/functions/context.ts
index 1e6102cf3..2f744b498 100644
--- a/src/functions/context.ts
+++ b/src/functions/context.ts
@@ -174,16 +174,67 @@ export function registerContextFunction(
       for (let j = 0; j < sessionsNeedingObs.length; j++) {
         const i = sessionsNeedingObs[j];
         const observations = obsResults[j];
+        // Tighten the filter: drop observations with empty narrative so
+        // they never reach the renderer and produce dangling-colon lines
+        // like `- [other] conversation: `.
         const important = observations.filter(
-          (o) => o.title && o.importance >= 5,
+          (o) =>
+            o.title &&
+            o.importance >= 5 &&
+            (o.narrative || "").trim().length > 0,
         );
 
         if (important.length > 0) {
           const top = important
             .sort((a, b) => b.importance - a.importance)
             .slice(0, 5);
+          // Defensive renderer: when the stored title is empty, equals the
+          // type, or is a generic tool name like "conversation", fall back
+          // to the subtitle (user message) as the title and use the
+          // narrative as the body. This handles observations stored before
+          // the inferType fix landed, where the synthetic compressor
+          // used the raw tool name as the title. Without this fallback
+          // those observations render as `- [other] conversation: ` with
+          // a dangling colon and no content.
+          const GENERIC_TITLES = new Set([
+            "conversation",
+            "other",
+            "observation",
+            "tool",
+          ]);
           const items = top
-            .map((o) => `- [${o.type}] ${o.title}: ${o.narrative}`)
+            .map((o) => {
+              const titleIsGeneric =
+                !o.title ||
+                o.title === o.type ||
+                GENERIC_TITLES.has(o.title);
+              const title = titleIsGeneric
+                ? o.subtitle
+                  ? o.subtitle.slice(0, 80)
+                  : o.narrative
+                    ? o.narrative
+                        .slice(0, 80)
+                        .replace(/\|/g, " ")
+                        .trim()
+                    : o.type
+                : o.title;
+              // Avoid title/content duplication when the title was
+              // derived from the start of the narrative.
+              let narrative = o.narrative || o.subtitle || "";
+              if (
+                title &&
+                narrative
+                  .toLowerCase()
+                  .startsWith(title.toLowerCase().slice(0, 40))
+              ) {
+                narrative = narrative
+                  .slice(title.length)
+                  .replace(/^[\s|:,\-]+/, "")
+                  .trim();
+                if (!narrative) narrative = o.narrative || "";
+              }
+              return `- [${o.type}] ${title}: ${narrative}`;
+            })
             .join("\n");
           const content = `## Session ${sessions[i].id.slice(0, 8)} (${sessions[i].startedAt})\n${items}`;
           blocks.push({