diff --git a/classes/local/store/object_file_system.php b/classes/local/store/object_file_system.php
index de30f1d2..de53f1a4 100644
--- a/classes/local/store/object_file_system.php
+++ b/classes/local/store/object_file_system.php
@@ -246,14 +246,14 @@ public function is_file_readable_externally_by_storedfile(stored_file $file) {
      * @return bool
      */
     public function is_file_readable_externally_by_hash($contenthash) {
-        if ($contenthash === sha1('')) {
-            // Files with empty size are either directories or empty.
+        $path = $this->get_external_path_from_hash($contenthash, false);
+
+        if ($contenthash === sha1('') && is_dir($path)) {
+            // Explicitly check if it is a directory, handle empty files as normal.
             // We handle these virtually.
             return true;
         }
 
-        $path = $this->get_external_path_from_hash($contenthash, false);
-
         // Note - it is not possible to perform a content recovery safely from a hash alone.
         return is_readable($path);
     }
diff --git a/settings.php b/settings.php
index aef3c571..b337de57 100644
--- a/settings.php
+++ b/settings.php
@@ -110,6 +110,9 @@
         new lang_string('settings:tokenexpirywarnperiod', 'tool_objectfs'),
         '', 60 * DAYSECS, DAYSECS));
 
+    $settings->add(new admin_setting_configcheckbox('tool_objectfs/preferexternal',
+        new lang_string('settings:preferexternal', 'tool_objectfs'), '', ''));
+
     $settings->add(new admin_setting_heading('tool_objectfs/filetransfersettings',
         new lang_string('settings:filetransferheader', 'tool_objectfs'), ''));
 
@@ -247,10 +250,4 @@
             }
         }
     }
-
-    $settings->add(new admin_setting_heading('tool_objectfs/testsettings',
-        new lang_string('settings:testingheader', 'tool_objectfs'), ''));
-
-    $settings->add(new admin_setting_configcheckbox('tool_objectfs/preferexternal',
-        new lang_string('settings:preferexternal', 'tool_objectfs'), '', ''));
 }