Beyond the Needle's Illusion: Decoupled Evaluation of Evidence Access and Use under Semantic Interference at 326M-Token Scale

Long-context LLM agents must access the right evidence from large environments and use it faithfully. However, the popular Needle-in-a-Haystack (NIAH) evaluation mostly measures benign span localization. The needle is near-unique, and the haystack is largely irrelevant. We introduce EverMemBench-S (EMB-S), an adversarial NIAH-style benchmark built on a 326M-token MemoryBank. While the full MemoryBank spans 326M tokens for retrieval-based (RAG) evaluation, we evaluate native long-context models only at scales that fit within each model's context window (up to 1M tokens in this work) to ensure a fair comparison. EMB-S pairs queries with collision-tested near-miss hard negatives and gold evidence sets spanning one or more documents, validated via human screening and LLM verification. We also propose a decoupled diagnostic protocol that reports evidence access (document-ID localization) separately from end-to-end QA quality under full-context prompting. This enables consistent diagnosis for both native long-context prompting and retrieval pipelines. Across a reference-corpus ladder from domain-isolated 64K contexts to a globally shared 326M-token environment, we observe a clear reality gap. Systems that saturate benign NIAH degrade sharply in evidence access under semantic interference. These results indicate that semantic discrimination, not context length alone, is the dominant bottleneck for long-context memory at scale.