This seems to happen more for those with external steam libraries.
i know the devs have looked into it in the past, its difficult to reproduce yet seems to happen to a select group of players all the time.
I also have this issue, have done many things to try and find a solution yet just cant figure out why it happens.

the best way i have found to deal with it in the meantime is to just create a batch file in the gamefolder with this content:

<code>
set BaseDir=%~dp0
start steam://rungameid/299740/
del /s /q %BaseDir%Mods
</code>

this will delete the mods folder everytime you start the game

its because your steam is making the folder read only and due to that the game can not go and replace what it needs to

mabe in some cases. but the issue is there present for others without this being the case..
My Folders are not set readonly at all and mine still fails to download them...
it will work the first time. then on further attempts to join any server that has "AT LEAST 1" of any mod you have allready downloaded it will fail. due to a Windows Filesystem error.
NTFS_NAME_COLLISION just no idea why

this issue has persisted for me for the best part of 2 years. through multiple windows and steam re-installs, on 2 different drives.. while there are many others that have never had the issue, its a bit strange to be honest

Originally posted by ☣Theros:

this issue has persisted for me for the best part of 2 years. through multiple windows and steam re-installs, on 2 different drives.. while there are many others that have never had the issue, its a bit strange to be honest

Same here. I've not been able to play on any modded server for a while now. It attempts to install it and yet, after it does, when I play, it wants to install the mod again. I have the game installed on a External HDD and the mods folder is there but, nothing ever get placed into it. Just an empty folder whenever I look at it.