diff --git a/meshai/config_loader.py b/meshai/config_loader.py
index ffb8392..0a5d019 100644
--- a/meshai/config_loader.py
+++ b/meshai/config_loader.py
@@ -595,10 +595,14 @@ def save_section(
                 cleaned[key] = value
         return cleaned
 
-    data = check_secrets(data)
-
-    # Extract local fields
-    domain_data, local_updates = _extract_local_fields(section_name, data)
+    # List sections (e.g. mesh_sources) have no top-level dict to scan for
+    # local fields; clean each item for secrets and write the list directly.
+    if isinstance(data, list):
+        domain_data = [check_secrets(item) if isinstance(item, dict) else item for item in data]
+        local_updates = {}
+    else:
+        data = check_secrets(data)
+        domain_data, local_updates = _extract_local_fields(section_name, data)
 
     # Load existing target file
     if target_path.exists():
diff --git a/meshai/dashboard/api/config_routes.py b/meshai/dashboard/api/config_routes.py
index bebea1a..142943d 100644
--- a/meshai/dashboard/api/config_routes.py
+++ b/meshai/dashboard/api/config_routes.py
@@ -11,6 +11,7 @@ from meshai.config import (
     load_config,
     save_config,
 )
+from meshai.config_loader import save_section, get_config_dir_from_path
 
 logger = logging.getLogger(__name__)
 
@@ -102,9 +103,6 @@ async def update_config_section(section: str, request: Request):
         raise HTTPException(status_code=422, detail=f"Invalid JSON: {e}")
 
     try:
-        # Load fresh config from file to avoid conflicts
-        config = load_config(config_path)
-
         # Get the section's dataclass type
         field_info = Config.__dataclass_fields__.get(section)
         if not field_info:
@@ -112,31 +110,39 @@ async def update_config_section(section: str, request: Request):
 
         field_type = field_info.type
 
-        # Handle list types (mesh_sources)
+        # Validate by coercing to the dataclass (runs __post_init__ validators),
+        # then persist via the multi-file / !include-aware save_section. The
+        # monolithic save_config cannot parse the !include orchestrator and blew
+        # up on every save in the prod layout (v0.4 C.2.1 fix).
         if section == "mesh_sources":
             from meshai.config import MeshSourceConfig
             new_value = [
                 _dict_to_dataclass(MeshSourceConfig, item) if isinstance(item, dict) else item
                 for item in body
             ]
-        # Handle dataclass types
+            data_to_save = [
+                _dataclass_to_dict(v) if hasattr(v, "__dataclass_fields__") else v
+                for v in new_value
+            ]
         elif hasattr(field_type, "__dataclass_fields__"):
             new_value = _dict_to_dataclass(field_type, body)
+            data_to_save = _dataclass_to_dict(new_value)
         else:
             new_value = body
+            data_to_save = body
 
-        # Set the section on config
-        setattr(config, section, new_value)
-
-        # Save config to file
-        save_config(config, config_path)
+        config_dir = get_config_dir_from_path(config_path)
+        save_section(section, data_to_save, config_dir)
 
         # Determine if restart is required
         restart_required = section in RESTART_REQUIRED_SECTIONS
 
-        # Update live config if restart not required
-        if not restart_required:
-            request.app.state.config = config
+        # Keep the live config in sync (no disk reload needed) when no restart is required
+        if not restart_required and getattr(request.app.state, "config", None) is not None:
+            try:
+                setattr(request.app.state.config, section, new_value)
+            except Exception:
+                pass
 
         logger.info(f"Config section '{section}' updated, restart_required={restart_required}")
 
diff --git a/tests/test_dashboard_config_save.py b/tests/test_dashboard_config_save.py
new file mode 100644
index 0000000..4ee84f0
--- /dev/null
+++ b/tests/test_dashboard_config_save.py
@@ -0,0 +1,40 @@
+"""v0.4 C.2.1: dashboard config save routes through the multi-file save_section
+(the !include-aware writer), not the monolithic save_config."""
+
+import yaml
+
+from meshai.config_loader import save_section
+
+
+def test_save_section_writes_env_feeds(tmp_path):
+    (tmp_path / "env_feeds.yaml").write_text("enabled: true\nnws:\n  enabled: true\n")
+    res = save_section("environmental", {
+        "enabled": True,
+        "nws": {"enabled": True, "feed_source": "native"},
+        "usgs_quake": {"enabled": False, "feed_source": "native"},
+    }, tmp_path)
+    assert res["saved"] is True
+    written = yaml.safe_load((tmp_path / "env_feeds.yaml").read_text())
+    assert written["nws"]["feed_source"] == "native"
+    assert written["usgs_quake"]["feed_source"] == "native"
+    # only env_feeds.yaml was written; no config.yaml / orchestrator touched
+    assert not (tmp_path / "config.yaml").exists()
+
+
+def test_save_section_strips_secret_fields(tmp_path):
+    res = save_section("environmental", {
+        "enabled": True,
+        "traffic": {"enabled": True, "api_key": "SECRET123"},
+    }, tmp_path)
+    written = yaml.safe_load((tmp_path / "env_feeds.yaml").read_text())
+    assert "api_key" not in written.get("traffic", {})
+    assert "traffic.api_key" in res["rejected_secrets"]
+
+
+def test_save_section_handles_list_section(tmp_path):
+    # mesh_sources is a top-level list section -- must not crash (C.2.1 guard)
+    res = save_section("mesh_sources", [{"name": "a", "type": "mqtt", "enabled": True}], tmp_path)
+    assert res["saved"] is True
+    written = yaml.safe_load((tmp_path / "mesh_sources.yaml").read_text())
+    assert isinstance(written, list)
+    assert written[0]["name"] == "a"