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How does CXInsight handle these break downs?

The following steps execute as a single transaction (so if any part fails both client node and project node are restored to the previous state).
 
1.    The synchronization prolog synchronizes the client node and project nodes workspace copies. In your example assuming there are no other files, then this step does nothing.
2.    The integrated operation executes on the project node, changing the project node copy of the workspace.
3.    The synchronization epilog synchronizes the client node and project nodes workspace copies. In your example this transfers the changed TGZ file to the client workspace copy.