Regression in `zio/zio-schema` for typer/implicit resolution

[WojciechMazur]

Based on OpenCB failure in zio/zio-schema - build logs

Compiler version

3.8.0-RC1 nightlies
Bisect points to c2ef180 / #20459

Minimized code

sealed trait Schema[A]
object Schema:
  def enumeration[A, C <: CaseSet.Aux[A]](caseSet: C): Schema[A] = ???

sealed trait Case[R, A]
sealed trait CaseSet:
  type EnumType

object CaseSet {
  def caseOf[A: Schema, Z >: A]: Cons[A, Empty[Z], Z] = ???
  type Aux[EnumType0] = CaseSet { type EnumType = EnumType0 }

  final class Empty[Z] extends CaseSet:
    type EnumType = Z
    // def ++[That](that: That)(implicit append: Append[Z, Empty[Z], That]): append.Out = ???
  object Empty:
    type Aux[Z] = CaseSet.Empty[Z] { type EnumType = Z }

  sealed trait :+:[A, +T <: CaseSet] extends CaseSet
  final class Cons[A, +T <: CaseSet.Aux[Z], Z](head: Case[Z, A], tail: T) extends :+:[A, T]:
    type EnumType = Z
    def ++[That](that: That)(implicit append: Append[Z, Cons[A, T, Z], That]): append.Out = ???
}

object Cons0:
  type Aux[A, T <: CaseSet.Aux[Z], Z] = CaseSet.Cons[A, T, Z] { type EnumType = Z }

sealed trait Append[EnumType, -Left, -Right]:
  type Out <: CaseSet.Aux[EnumType]

object Append extends AppendLowPriority:
  type WithOut[EnumType, Left, Right, Out0] = Append[EnumType, Left, Right] { type Out = Out0 }

  implicit def AppendCons[A, T <: CaseSet.Aux[Z], Z, That <: CaseSet.Aux[Z]](implicit
      append: Append[Z, T, That]
  ): Append.WithOut[Z, CaseSet.Cons[A, T, Z], That, CaseSet.Cons[A, append.Out, Z]] = ???

trait AppendLowPriority extends AppendLowPriority2:
  implicit def AppendEmptyRight[T <: CaseSet.Aux[Z], Z]: Append.WithOut[Z, T, CaseSet.Empty[Z], T] =
    ???

trait AppendLowPriority2:
  implicit def AppendEmptyLeft[T <: CaseSet.Aux[Z], Z]: Append.WithOut[Z, CaseSet.Empty[Z], T, T] =
    ???

object Test:
  given Schema[Int] = ???
  given Schema[Boolean] = ???
  given Schema[String] = ???

  type UnionValue = Int | Boolean | String
  given Schema[UnionValue] = Schema.enumeration[UnionValue, CaseSet.Aux[UnionValue]](
      CaseSet.caseOf[Int, UnionValue] ++
      CaseSet.caseOf[Boolean, UnionValue] ++
      CaseSet.caseOf[String, UnionValue]
  )

Output

error] No given instance of type Append[Int | Boolean | String, CaseSet.Cons[Int, ?1.Out, Int | Boolean | String], CaseSet.Cons[String, CaseSet.Empty[Test.UnionValue], Test.UnionValue]] was found for parameter append of method ++ in class Cons.
[error] I found:
[error] 
[error]     Append.AppendCons[Int, T, Int | Boolean | String, That](/* missing */summon[Append[Int | Boolean | String, T, That]])
[error] 
[error] But no implicit values were found that match type Append[Int | Boolean | String, T, That]
[error] 
[error] where:    ?1 is an unknown value of type Append.WithOut[Int | Boolean | String, CaseSet.Empty[Int | Boolean | String], T², T²]
[error] .
[error]       CaseSet.caseOf[String, UnionValue]
[error]                                         ^
Error compiling project (Scala 3.8.0-RC1-bin-20250921-834e8e9-NIGHTLY, JVM (21))

Expectation

Should compile