diff --git a/DEPS b/DEPS
index 24ee3bcca6aa..21c119f62a54 100644
--- a/DEPS
+++ b/DEPS
@@ -189,7 +189,7 @@ vars = {
   "typed_data_rev": "0b16bd26c90bc9ac08e8b4b259aa3d7bead34feb",
   "usage_rev": "e99690ae6d5fa9ec24ac5218bcd3621e8e3ae8a9",
   "vector_math_rev": "cca3cf191628bce5354a5989ae61261837ceabfc",
-  "watcher_rev": "6ac67f18d7f3a0eea728c45ea16993bdfb91ea42",
+  "watcher_rev": "dc45f1925f66743ff29b9dcbb4693a7ec25945c5",
   "web_rev": "cffc2e3d80591c3ddf536f27a7f2fce49ff45e7d",
   "web_socket_channel_rev": "5241175e7c66271850d6e75fb9ec90068f9dd3c4", # https://github.com/dart-lang/sdk/issues/54165
   "webdev_rev": "63e09e5060813a971ec0f95472613d6958f75b95",
diff --git a/pkg/analysis_server/test/integration/lsp_server/diagnostic_test.dart b/pkg/analysis_server/test/integration/lsp_server/diagnostic_test.dart
index 97aaca65228d..bf0855df7f57 100644
--- a/pkg/analysis_server/test/integration/lsp_server/diagnostic_test.dart
+++ b/pkg/analysis_server/test/integration/lsp_server/diagnostic_test.dart
@@ -2,8 +2,6 @@
 // for details. All rights reserved. Use of this source code is governed by a
 // BSD-style license that can be found in the LICENSE file.
 
-import 'dart:io';
-
 import 'package:analyzer/src/test_utilities/test_code_format.dart';
 import 'package:test/test.dart';
 import 'package:test_reflective_loader/test_reflective_loader.dart';
@@ -85,21 +83,7 @@ linter:
 
   /// Ensure we get diagnostics for a project even if the workspace contains
   /// another folder that does not exist.
-  @FailingTest(issue: 'https://github.com/dart-lang/sdk/issues/54116')
   Future<void> test_workspaceFolders_existsAndDoesNotExist() async {
-    if (!Platform.isWindows) {
-      // IF THIS TEST STARTS FAILING...
-      //
-      // This test is (at the time of writing) expected to fail on Windows. It
-      // passes on other platforms so we explicitly fail here for consistency.
-      //
-      // If the Windows bot start failing (because the issue is fixed and the
-      // test is now passing on Windows), this conditional code block should be
-      // removed, along with the .timeout() further down.
-      fail('Forced failure for non-Windows so we can detect when the Windows '
-          'issue is fixed');
-    }
-
     final rootPath = projectFolderUri.toFilePath();
     final existingFolderUri = Uri.file(pathContext.join(rootPath, 'exists'));
     final existingFileUri =
@@ -115,11 +99,7 @@ linter:
     await initialize(
         workspaceFolders: [existingFolderUri, nonExistingFolderUri]);
 
-    // The .timeout() is to ensure this test fails in a way that @FailingTest
-    //  supports and does not just time out. This timeout should be removed
-    //  when the test is passing.
-    final diagnostics =
-        await diagnosticsFuture.timeout(const Duration(seconds: 10));
+    final diagnostics = await diagnosticsFuture;
     expect(diagnostics, hasLength(1));
     expect(diagnostics!.single.code, 'undefined_class');
   }