fix: resolve master password prompt issues for new and returning users

  - Fix useMasterPassword hook to prompt new users without master password
  - Fix returning users not being prompted after sign-out/sign-in
  - Fix API initialization order to prevent 500 errors
  - Add reinitialize function to properly reload data after password setup
  - Update MainLayout to handle password unlock flow correctly

  This ensures all users are prompted for master password as expected:
  - New users: prompted to create master password
  - Returning users: prompted to unlock with existing password
  - No more API 500 errors during user initialization

Author: batalabs

src/components/layout/MainLayout.tsx

@@ -43,6 +43,7 @@ export default function MainLayout() {
     setCurrentView,
     setSearchQuery,
     refetch,
+    reinitialize,
   } = useNotes();
 
   const handleCreateNote = useCallback((templateContent?: { title: string; content: string }) => {
@@ -90,6 +91,12 @@ export default function MainLayout() {
     }, 1500);
   }, [setSelectedNote]);
 
+  const handleMasterPasswordUnlock = useCallback(() => {
+    handleUnlockSuccess();
+    // Force re-initialize and fetch data after successful unlock/setup
+    void reinitialize();
+  }, [handleUnlockSuccess, reinitialize]);
+
   const folderPanelProps: FolderPanelProps = {
     currentView, folders, selectedFolder, searchQuery, notesCount, starredCount, archivedCount, trashedCount, expandedFolders,
     onUpdateFolder: (id, name, color) => updateFolder(id, { name, color }),
@@ -144,7 +151,7 @@ export default function MainLayout() {
             <p className="text-gray-600">Your notes are protected with end-to-end encryption</p>
           </div>
         </div>
-        <MasterPasswordDialog userId={userId} onSuccess={handleUnlockSuccess} />
+        <MasterPasswordDialog userId={userId} onSuccess={handleMasterPasswordUnlock} />
       </>
     );
   }

src/hooks/useMasterPassword.ts

@@ -17,8 +17,10 @@ export function useMasterPassword() {
       const hasPassword = hasMasterPassword(user.id);
       const isUnlocked = isMasterPasswordUnlocked(user.id);
 
-      // Needs unlock if has password but not unlocked
-      setNeedsUnlock(hasPassword && !isUnlocked);
+      // Needs unlock if:
+      // 1. User has password but not unlocked (returning user)
+      // 2. User doesn't have password at all (new user needs to set one up)
+      setNeedsUnlock(!hasPassword || (hasPassword && !isUnlocked));
       setIsChecking(false);
     };
 

src/hooks/useNotes.ts

@@ -2,7 +2,7 @@ import { useState, useMemo, useEffect, useCallback, useRef } from 'react';
 import { useAuth, useUser } from '@clerk/clerk-react';
 import { api, type ApiNote, type ApiFolder } from '@/lib/api/api.ts';
 import { fileService } from '@/services/fileService';
-import { clearEncryptionKeys } from '@/lib/encryption';
+import { clearEncryptionKeys, hasMasterPassword, isMasterPasswordUnlocked } from '@/lib/encryption';
 import type { Note, Folder, ViewMode } from '@/types/note';
 import { getDescendantIds } from '@/utils/folderTree';
 
@@ -39,7 +39,15 @@ export function useNotes() {
     try {
       setError(null);
       api.setCurrentUser(clerkUser!.id);
-      await api.getCurrentUser();
+      
+      // Only call API if user has a master password set up and unlocked
+      const hasPassword = hasMasterPassword(clerkUser!.id);
+      const isUnlocked = isMasterPasswordUnlocked(clerkUser!.id);
+      
+      if (hasPassword && isUnlocked) {
+        await api.getCurrentUser();
+      }
+      
       setEncryptionReady(true);
     } catch (error) {
       console.error('Failed to initialize user:', error);
@@ -110,7 +118,13 @@ export function useNotes() {
 
   useEffect(() => {
     if (encryptionReady && clerkUser) {
-      void loadData();
+      const hasPassword = hasMasterPassword(clerkUser.id);
+      const isUnlocked = isMasterPasswordUnlocked(clerkUser.id);
+      
+      // Only load data if user has master password set up and unlocked
+      if (hasPassword && isUnlocked) {
+        void loadData();
+      }
     }
   }, [encryptionReady, clerkUser, loadData]);
 
@@ -541,5 +555,11 @@ export function useNotes() {
     setSearchQuery,
     setFolders,
     refetch: loadData,
+    reinitialize: async () => {
+      if (clerkUser) {
+        await initializeUser();
+        await loadData();
+      }
+    },
   };
 }