diff --git a/sandbox/manager.go b/sandbox/manager.go
index 93e9ca29..9052ff28 100644
--- a/sandbox/manager.go
+++ b/sandbox/manager.go
@@ -319,21 +319,35 @@ func (m *Manager) Exec(ctx context.Context, name string, cmd []string, opts *Exe
 	}
 	defer reader.Close()
 
-	// Read all output
-	output, err := io.ReadAll(reader)
-	if err != nil {
+	// Read output with context awareness
+	outputCh := make(chan []byte, 1)
+	errCh := make(chan error, 1)
+
+	go func() {
+		output, err := io.ReadAll(reader)
+		if err != nil {
+			errCh <- err
+			return
+		}
+		outputCh <- output
+	}()
+
+	select {
+	case <-ctx.Done():
+		return nil, ctx.Err()
+	case err := <-errCh:
 		return nil, fmt.Errorf("failed to read output: %w", err)
+	case output := <-outputCh:
+		// Parse Docker multiplexed stream
+		// TODO: Properly demux stdout/stderr from Docker stream
+		stdout := string(output)
+
+		return &ExecResult{
+			ExitCode: 0,
+			Stdout:   stdout,
+			Stderr:   "",
+		}, nil
 	}
-
-	// Parse Docker multiplexed stream
-	// TODO: Properly demux stdout/stderr from Docker stream
-	stdout := string(output)
-
-	return &ExecResult{
-		ExitCode: 0,
-		Stdout:   stdout,
-		Stderr:   "",
-	}, nil
 }
 
 // Start starts a stopped container
@@ -454,6 +468,14 @@ func (m *Manager) WriteFile(ctx context.Context, name, path string, content []by
 	}
 	cont := c.(*Container)
 
+	// Ensure parent directory exists
+	dir := filepath.Dir(path)
+	if dir != "/" && dir != "." {
+		if _, err := m.Exec(ctx, name, []string{"mkdir", "-p", dir}, nil); err != nil {
+			return fmt.Errorf("failed to create parent directory: %w", err)
+		}
+	}
+
 	// Create a tar archive with the file
 	var buf bytes.Buffer
 	tw := tar.NewWriter(&buf)
@@ -474,7 +496,7 @@ func (m *Manager) WriteFile(ctx context.Context, name, path string, content []by
 	}
 
 	// Copy to container
-	return m.dockerClient.CopyToContainer(ctx, cont.ID, filepath.Dir(path), &buf, container.CopyToContainerOptions{})
+	return m.dockerClient.CopyToContainer(ctx, cont.ID, dir, &buf, container.CopyToContainerOptions{})
 }
 
 // ReadFile reads content from a file in container
diff --git a/sandbox/manager_test.go b/sandbox/manager_test.go
index c5bcfdea..7bb83d08 100644
--- a/sandbox/manager_test.go
+++ b/sandbox/manager_test.go
@@ -271,15 +271,26 @@ func TestExecWithTimeout(t *testing.T) {
 	}
 	defer m.Remove(ctx, container.Name)
 
-	// Execute command with very short timeout
+	// Execute command with short timeout (sleep 10s but timeout after 500ms)
+	start := time.Now()
 	_, err = m.Exec(ctx, container.Name, []string{"sleep", "10"}, &ExecOptions{
-		Timeout: 100 * time.Millisecond,
+		Timeout: 500 * time.Millisecond,
 	})
+	elapsed := time.Since(start)
 
-	// Should timeout
+	// Should timeout with context deadline exceeded
 	if err == nil {
-		t.Log("Expected timeout error, but command completed (may be fast system)")
+		t.Error("Expected timeout error, but command completed without error")
+	} else if err != context.DeadlineExceeded {
+		t.Logf("Got error (expected context.DeadlineExceeded): %v", err)
 	}
+
+	// Verify it didn't wait the full 10 seconds
+	if elapsed > 5*time.Second {
+		t.Errorf("Timeout took too long: %v (expected < 5s)", elapsed)
+	}
+
+	t.Logf("Timeout completed in %v", elapsed)
 }
 
 // TestFileOperations tests filesystem operations