diff --git a/RELEASE_NOTES.md b/RELEASE_NOTES.md
index b4786b121f..90332dcbeb 100644
--- a/RELEASE_NOTES.md
+++ b/RELEASE_NOTES.md
@@ -1,9 +1,12 @@
-#### 4.0.0-alpha037 - 20.12.2016
+#### 4.0.0-alpha038 - 20.12.2016
 * Make Paket compatible with DotNet SDK preview3
 * Tail Recursive Package Resolution - https://github.com/fsprojects/Paket/pull/2066
 * Reorganized resolver - https://github.com/fsprojects/Paket/pull/2039
 * USABILITY: Added option to have paket restore fail on check failure - https://github.com/fsprojects/Paket/pull/1963
 
+#### 3.31.6 - 20.12.2016
+* BUGFIX: If we have ref and lib files then we prefer lib
+
 #### 3.31.5 - 19.12.2016
 * BUGFIX: Don't remove group with only remote files - https://github.com/fsprojects/Paket/pull/2089
 * BUGFI: Fix displayed package name for packages found in another group - https://github.com/fsprojects/Paket/pull/2088
diff --git a/src/Paket.Bootstrapper/Properties/AssemblyInfo.cs b/src/Paket.Bootstrapper/Properties/AssemblyInfo.cs
index 97954de68d..f943e7bfe2 100644
--- a/src/Paket.Bootstrapper/Properties/AssemblyInfo.cs
+++ b/src/Paket.Bootstrapper/Properties/AssemblyInfo.cs
@@ -4,16 +4,16 @@
 [assembly: AssemblyTitleAttribute("Paket.Bootstrapper")]
 [assembly: AssemblyProductAttribute("Paket")]
 [assembly: AssemblyDescriptionAttribute("A dependency manager for .NET with support for NuGet packages and git repositories.")]
-[assembly: AssemblyVersionAttribute("4.0.0")]
-[assembly: AssemblyFileVersionAttribute("4.0.0")]
-[assembly: AssemblyInformationalVersionAttribute("4.0.0-alpha037")]
+[assembly: AssemblyVersionAttribute("3.31.6")]
+[assembly: AssemblyFileVersionAttribute("3.31.6")]
+[assembly: AssemblyInformationalVersionAttribute("3.31.6")]
 namespace System {
     internal static class AssemblyVersionInformation {
         internal const System.String AssemblyTitle = "Paket.Bootstrapper";
         internal const System.String AssemblyProduct = "Paket";
         internal const System.String AssemblyDescription = "A dependency manager for .NET with support for NuGet packages and git repositories.";
-        internal const System.String AssemblyVersion = "4.0.0";
-        internal const System.String AssemblyFileVersion = "4.0.0";
-        internal const System.String AssemblyInformationalVersion = "4.0.0-alpha037";
+        internal const System.String AssemblyVersion = "3.31.6";
+        internal const System.String AssemblyFileVersion = "3.31.6";
+        internal const System.String AssemblyInformationalVersion = "3.31.6";
     }
 }
diff --git a/src/Paket.Core/InstallModel.fs b/src/Paket.Core/InstallModel.fs
index 4453533a30..971d041e7f 100644
--- a/src/Paket.Core/InstallModel.fs
+++ b/src/Paket.Core/InstallModel.fs
@@ -138,10 +138,14 @@ module InstallModel =
           Analyzers = []
           LicenseUrl = None }
 
-    let getReferenceFolders (installModel: InstallModel) =
-        if installModel.NewReferenceFileFolders.IsEmpty then
-          installModel.LegacyReferenceFileFolders
-        else installModel.NewReferenceFileFolders
+    let getReferenceFolders (installModel: InstallModel) = 
+        installModel.LegacyReferenceFileFolders @
+        (installModel.NewReferenceFileFolders
+         |> List.choose (fun r ->
+            match installModel.LegacyReferenceFileFolders |> List.tryFind (fun r2 -> r2.Targets = r.Targets) with
+            | None -> Some r
+            | _ -> None))
+            
 
     let extractRefFolder packageName (path:string) =
         let path = path.Replace("\\", "/").ToLower()
@@ -420,7 +424,7 @@ type InstallModel with
 
     static member EmptyModel (packageName, packageVersion) = InstallModel.emptyModel packageName packageVersion
 
-    member this.GetReferenceFolders () = InstallModel.getReferenceFolders this
+    member this.GetReferenceFolders() = InstallModel.getReferenceFolders this
 
     member this.MapFolders mapfn = InstallModel.mapFolders mapfn this
 
@@ -449,8 +453,6 @@ type InstallModel with
     member this.AddTargetsFile(path, file) = InstallModel.addTargetsFile path file this
 
     member this.AddTargetsFiles targetsFiles = InstallModel.addTargetsFiles targetsFiles this
-
-    //member this.AddPackageFile (path, file, references) = InstallModel.addPackageFile path file references this
     
     member this.AddFrameworkAssemblyReference reference = InstallModel.addFrameworkAssemblyReference this reference 
 
diff --git a/src/Paket.Core/PlatformMatching.fs b/src/Paket.Core/PlatformMatching.fs
index 9742719fd5..cfca3afcc2 100644
--- a/src/Paket.Core/PlatformMatching.fs
+++ b/src/Paket.Core/PlatformMatching.fs
@@ -107,7 +107,7 @@ let platformsSupport =
 
 
 let findBestMatch = 
-    let rec findBestMatch (paths : string list,targetProfile : TargetProfile) = 
+    let rec findBestMatch (paths : string list, targetProfile : TargetProfile) = 
         let requiredPlatforms = 
             match targetProfile with
             | PortableProfile(_, platforms) -> platforms
@@ -140,7 +140,7 @@ let findBestMatch =
                         None
                 | _ -> None)
             |> List.distinct
-            |> List.sortBy (fun (x, pen) -> pen, (extractPlatforms x).Length) // prefer portable platform whith less platforms
+            |> List.sortBy (fun (x, pen) -> pen, (extractPlatforms x).Length) // prefer portable platform with less platforms
             |> List.map fst
             |> List.tryHead
         | path -> path
diff --git a/src/Paket/Paket.fsproj b/src/Paket/Paket.fsproj
index cfbccd79ec..44fb45a002 100644
--- a/src/Paket/Paket.fsproj
+++ b/src/Paket/Paket.fsproj
@@ -61,6 +61,8 @@
     <StartWorkingDirectory>D:\temp\IconPacksTestApp\src</StartWorkingDirectory>
     <StartArguments>update</StartArguments>
     <StartWorkingDirectory>D:\temp\unlisted</StartWorkingDirectory>
+    <StartArguments>install</StartArguments>
+    <StartWorkingDirectory>D:\temp\PaketWithProblem1</StartWorkingDirectory>
   </PropertyGroup>
   <PropertyGroup>
     <MinimumVisualStudioVersion Condition="'$(MinimumVisualStudioVersion)' == ''">11</MinimumVisualStudioVersion>
diff --git a/tests/Paket.Tests/InstallModel/ProcessingSpecs.fs b/tests/Paket.Tests/InstallModel/ProcessingSpecs.fs
index f66d69398c..2242a5b81a 100644
--- a/tests/Paket.Tests/InstallModel/ProcessingSpecs.fs
+++ b/tests/Paket.Tests/InstallModel/ProcessingSpecs.fs
@@ -71,13 +71,13 @@ let ``should understand reference folder``() =
 
     let refs = model.GetLibReferences(SinglePlatform (DotNetStandard DotNetStandardVersion.V1_6))
     refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\runtimes\win\lib\net46\System.Security.Cryptography.Algorithms.dll"
-    refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\lib\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
-    refs |> shouldContain @"..\System.Security.Cryptography.Algorithms\ref\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
+    refs |> shouldContain @"..\System.Security.Cryptography.Algorithms\lib\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
+    refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\ref\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
     
     let refs = model.GetLibReferences(SinglePlatform (DotNetFramework FrameworkVersion.V4_6_3))
     refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\runtimes\win\lib\net46\System.Security.Cryptography.Algorithms.dll"
-    refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\lib\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
-    refs |> shouldContain @"..\System.Security.Cryptography.Algorithms\ref\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
+    refs |> shouldContain @"..\System.Security.Cryptography.Algorithms\lib\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
+    refs |> shouldNotContain @"..\System.Security.Cryptography.Algorithms\ref\netstandard1.6\System.Security.Cryptography.Algorithms.dll"
 
 [<Test>]
 let ``should understand aot in runtimes``() = 
diff --git a/tests/Paket.Tests/InstallModel/Xml/System.Security.Cryptography.Algorithms.fs b/tests/Paket.Tests/InstallModel/Xml/System.Security.Cryptography.Algorithms.fs
index cc1ec4a906..92fa7d18ff 100644
--- a/tests/Paket.Tests/InstallModel/Xml/System.Security.Cryptography.Algorithms.fs
+++ b/tests/Paket.Tests/InstallModel/Xml/System.Security.Cryptography.Algorithms.fs
@@ -11,8 +11,8 @@ let expected = """
   <When Condition="$(TargetFrameworkIdentifier) == '.NETFramework' And $(TargetFrameworkVersion) == 'v4.6'">
     <ItemGroup>
       <Reference Include="System.Security.Cryptography.Algorithms">
-        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\ref\net46\System.Security.Cryptography.Algorithms.dll</HintPath>
-        <Private>False</Private>
+        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\lib\net46\System.Security.Cryptography.Algorithms.dll</HintPath>
+        <Private>True</Private>
         <Paket>True</Paket>
       </Reference>
     </ItemGroup>
@@ -20,8 +20,8 @@ let expected = """
   <When Condition="$(TargetFrameworkIdentifier) == '.NETFramework' And ($(TargetFrameworkVersion) == 'v4.6.1' Or $(TargetFrameworkVersion) == 'v4.6.2')">
     <ItemGroup>
       <Reference Include="System.Security.Cryptography.Algorithms">
-        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\ref\net461\System.Security.Cryptography.Algorithms.dll</HintPath>
-        <Private>False</Private>
+        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\lib\net461\System.Security.Cryptography.Algorithms.dll</HintPath>
+        <Private>True</Private>
         <Paket>True</Paket>
       </Reference>
     </ItemGroup>
@@ -29,8 +29,8 @@ let expected = """
   <When Condition="$(TargetFrameworkIdentifier) == '.NETFramework' And $(TargetFrameworkVersion) == 'v4.6.3'">
     <ItemGroup>
       <Reference Include="System.Security.Cryptography.Algorithms">
-        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\ref\net463\System.Security.Cryptography.Algorithms.dll</HintPath>
-        <Private>False</Private>
+        <HintPath>..\..\..\System.Security.Cryptography.Algorithms\lib\net463\System.Security.Cryptography.Algorithms.dll</HintPath>
+        <Private>True</Private>
         <Paket>True</Paket>
       </Reference>
     </ItemGroup>