Why don't .NET objects in PowerShell use the current directory?

You can change .net working dir to powershell working dir:
[Environment]::CurrentDirectory = (Get-Location -PSProvider FileSystem).ProviderPath
After this line all .net methods like [io.path]::GetFullPath and [IO.File]::WriteAllText will work without problems

The reasons PowerShell doesn't keep the .NET notion of current working directory in sync with PowerShell's notion of the working dir are:

1. PowerShell working dirs can be in a provider that isn't even file system based e.g. HKLM:\Software
2. A single PowerShell process can have multiple runspaces. Each runspace can be cd`d into a different file system location. However the .NET/process "working directory" is essentially a global for the process and wouldn't work for a scenario where there can be multiple working dirs (one per runspace).

For convenience, I added the following to my prompt function, so that it runs whenever a command finishes:

# Make .NET's current directory follow PowerShell's
# current directory, if possible.
if ($PWD.Provider.Name -eq 'FileSystem') {
    [System.IO.Directory]::SetCurrentDirectory($PWD)
}

This is not necessarily a great idea, because it means that some scripts (that assume that the Win32 working directory tracks the PowerShell working directory) will work on my machine, but not necessarily on others.