diff --git a/app/models/option_configs/config_errors.rb b/app/models/option_configs/config_errors.rb
index 351ea752e..6a48086f6 100644
--- a/app/models/option_configs/config_errors.rb
+++ b/app/models/option_configs/config_errors.rb
@@ -59,7 +59,8 @@ def all_option_configs_notices(object_instance_or_config, levels: nil)
           option_configs = if object_instance_or_config.respond_to?(:option_configs)
                              object_instance = object_instance_or_config
                              object_instance_or_config.option_configs(raise_bad_configs: [FphsOptionsParseError,
-                                                                                          FphsOptionsGeneralError])
+                                                                                          FphsOptionsGeneralError,
+                                                                                          FphsException])
                            else
                              object_instance_or_config
                            end
diff --git a/app/models/option_configs/extra_options.rb b/app/models/option_configs/extra_options.rb
index 5a7575e20..1dae5f0f8 100644
--- a/app/models/option_configs/extra_options.rb
+++ b/app/models/option_configs/extra_options.rb
@@ -11,6 +11,8 @@ class ExtraOptions < BaseOptions
     ValidValidIfTriggers = %i[on_create on_save on_update].freeze
     ValidSaveTriggerTriggers = %i[before_save on_create on_save on_update on_upload on_disable].freeze
     LibraryMatchRegex = /# @library\s+([^\s]+)\s+([^\s]+)\s*$/
+    # Top-level YAML keys in libraries that must be renamed to avoid collisions when injected
+    LibraryKeyRenamePatterns = %w[_definitions _default].freeze
     ValidFieldConfigs = %i[db_configs field_options labels caption_before dialog_before show_if].freeze
 
     def self.base_key_attributes
@@ -1025,7 +1027,9 @@ def self.include_libraries(content_to_update)
         name = res[2].strip
         lib = Admin::ConfigLibrary.content_named category, name, format: :yaml
         lib = (lib || '').dup
-        lib.gsub!(/^_definitions:.*/, "_definitions__#{category}_#{name}:")
+        LibraryKeyRenamePatterns.each do |key|
+          lib.gsub!(/^#{key}:.*/, "#{key}__#{category}_#{name}:")
+        end
         lib = "# @sourced_library_start #{category} #{name}\n#{lib}\n# @sourced_library_end #{category} #{name}\n"
         content_to_update.gsub!(res[0], lib)
         res = content_to_update.match reg
diff --git a/spec/models/option_configs/extra_options_library_default_spec.rb b/spec/models/option_configs/extra_options_library_default_spec.rb
new file mode 100644
index 000000000..1f2cbe8f7
--- /dev/null
+++ b/spec/models/option_configs/extra_options_library_default_spec.rb
@@ -0,0 +1,185 @@
+# frozen_string_literal: true
+
+require 'rails_helper'
+require './db/table_generators/dynamic_models_table'
+
+# Tests for GitHub issue #521:
+# "Adding `_default:` to a config library breaks configurations if other config
+# library `_definitions...:` appear below it"
+#
+# Verifies that:
+# - Config libraries containing `_default:` don't corrupt YAML when combined with
+#   other libraries containing `_definitions...:` blocks
+# - The admin panel shows parse errors gracefully instead of raising exceptions
+
+RSpec.describe OptionConfigs::ExtraOptions, '.include_libraries with _default and _definitions', type: :model do
+  include ModelSupport
+  include DynamicModelSupport
+
+  before :all do
+    change_setting('AllowDynamicMigrations', true)
+    create_admin
+    create_user
+    @rand_suffix = rand(1_000_000_000)
+
+    unless Admin::MigrationGenerator.table_exists? 'test_lib_default_opts'
+      TableGenerators.dynamic_models_table('test_lib_default_opts', :create_do, 'field_1', 'field_2')
+    end
+  end
+
+  after :all do
+    change_setting('AllowDynamicMigrations', false)
+  end
+
+  # Creates a pair of config libraries: one with _definitions: anchors,
+  # one with both _definitions: anchors and a _default: block.
+  # Returns [definitions_only_name, default_with_definitions_name]
+  def create_library_pair(category)
+    defs_name = "defs_lib_#{@rand_suffix}"
+    Admin::ConfigLibrary.create!(
+      current_admin: @admin,
+      name: defs_name,
+      category:,
+      format: 'yaml',
+      options: <<~YAML
+        _definitions:
+          never_show: &never_show
+            never: true
+      YAML
+    )
+
+    field_opts_name = "field_opts_lib_#{@rand_suffix}"
+    Admin::ConfigLibrary.create!(
+      current_admin: @admin,
+      name: field_opts_name,
+      category:,
+      format: 'yaml',
+      options: <<~YAML
+        _definitions:
+          field_never: &field_never
+            never: true
+
+        _default:
+          show_if:
+            a_field:
+              this:
+                status: *field_never
+      YAML
+    )
+
+    [defs_name, field_opts_name]
+  end
+
+  def generate_dm_with_options(options_yaml)
+    DynamicModel.active.where(table_name: 'test_lib_default_opts').reload.each { |d| d.disable!(@admin) }
+    if DynamicModel.const_defined?(:TestLibDefaultOpt, false)
+      DynamicModel.send(:remove_const, :TestLibDefaultOpt)
+    end
+
+    DynamicModel.create!(
+      current_admin: @admin,
+      name: 'test lib default opts',
+      table_name: 'test_lib_default_opts',
+      schema_name: 'dynamic_test',
+      primary_key_name: :id,
+      foreign_key_name: :master_id,
+      category: :test,
+      field_list: 'field_1 field_2',
+      options: options_yaml
+    )
+  end
+
+  def parse_options_for(options_yaml)
+    dm = generate_dm_with_options(options_yaml)
+    dm.class.options_provider.parse_config(dm)
+  end
+
+  describe 'library with _default: included above library with _definitions:' do
+    before :each do
+      @cat = "deflib_cat_#{@rand_suffix}"
+      @lib_defs_name, @lib_field_opts_name = create_library_pair(@cat)
+    end
+
+    it 'parses correctly when _default: library appears above _definitions: library' do
+      configs = parse_options_for(<<~YAML)
+        # @library #{@cat} #{@lib_field_opts_name}
+        # @library #{@cat} #{@lib_defs_name}
+
+        my_option_type:
+          labels:
+            field_1: My Field
+      YAML
+
+      expect(configs.map(&:name)).to include(:my_option_type)
+    end
+
+    it 'parses correctly when _definitions: library appears above _default: library' do
+      configs = parse_options_for(<<~YAML)
+        # @library #{@cat} #{@lib_defs_name}
+        # @library #{@cat} #{@lib_field_opts_name}
+
+        another_option_type:
+          labels:
+            field_1: Another Field
+      YAML
+
+      expect(configs.map(&:name)).to include(:another_option_type)
+    end
+
+    it 'does not treat _definitions_xxx: blocks as option types when _default: precedes them' do
+      # Reproduces issue #521: anchor definitions indented under _definitions:
+      # appear after library substitution. Without the fix, _default: from a
+      # library absorbs subsequent indented content as its children.
+      configs = parse_options_for(<<~YAML)
+        _definitions:
+          fs_enabled: &fs_enabled
+            always: true
+
+        # @library #{@cat} #{@lib_field_opts_name}
+        # @library #{@cat} #{@lib_defs_name}
+
+          update_reference_ref_status: &update_ref_status
+            force_not_editable_save: true
+
+        real_option_type:
+          labels:
+            field_1: Real Field
+          save_trigger:
+            on_save:
+              first:
+                top_referring_record:
+                  update: return_result
+      YAML
+
+      config_names = configs.map(&:name)
+      definitions_as_types = config_names.select { |n| n.to_s.start_with?('_definitions') }
+      expect(definitions_as_types).to be_empty,
+        "Expected no _definitions entries as option types, but found: #{definitions_as_types}"
+      expect(config_names).to include(:real_option_type)
+    end
+  end
+
+  describe 'graceful error handling when library collision causes parse failure' do
+    it 'returns error notices instead of raising when option_configs fails to parse' do
+      cat = "badlib_cat_#{@rand_suffix}"
+      defs_name, default_name = create_library_pair(cat)
+
+      dm = generate_dm_with_options(<<~YAML)
+        # @library #{cat} #{default_name}
+        # @library #{cat} #{defs_name}
+
+        some_bad_anchor_usage: &some_bad_ref
+          force_not_editable_save: true
+
+        valid_option:
+          labels:
+            field_1: Valid
+      YAML
+
+      result = OptionConfigs::ExtraOptions.all_option_configs_notices(dm)
+      expect(result).to be_present
+      error_types = result.map { |r| r[:type] }
+      expect(error_types).to include(:parse_error).or include(:error)
+    end
+  end
+end