Restore proper error for crate not in local reg

Fixes #10682.

src/cargo/sources/registry/local.rs

@@ -4,8 +4,8 @@ use crate::util::errors::CargoResult;
 use crate::util::{Config, Filesystem};
 use cargo_util::{paths, Sha256};
 use std::fs::File;
-use std::io::prelude::*;
 use std::io::SeekFrom;
+use std::io::{self, prelude::*};
 use std::path::Path;
 use std::task::Poll;
 
@@ -54,8 +54,17 @@ impl<'cfg> RegistryData for LocalRegistry<'cfg> {
         _index_version: Option<&str>,
     ) -> Poll<CargoResult<LoadResponse>> {
         if self.updated {
+            let raw_data = match paths::read_bytes(&root.join(path)) {
+                Err(e)
+                    if e.downcast_ref::<io::Error>()
+                        .map_or(false, |ioe| ioe.kind() == io::ErrorKind::NotFound) =>
+                {
+                    return Poll::Ready(Ok(LoadResponse::NotFound));
+                }
+                r => r,
+            }?;
             Poll::Ready(Ok(LoadResponse::Data {
-                raw_data: paths::read_bytes(&root.join(path))?,
+                raw_data,
                 index_version: None,
             }))
         } else {

tests/testsuite/local_registry.rs

@@ -62,6 +62,44 @@ fn simple() {
     p.cargo("test").run();
 }
 
+#[cargo_test]
+fn not_found() {
+    setup();
+    // Publish a package so that the directory hierarchy is created.
+    // Note, however, that we declare a dependency on baZ.
+    Package::new("bar", "0.0.1").local(true).publish();
+
+    let p = project()
+        .file(
+            "Cargo.toml",
+            r#"
+                [project]
+                name = "foo"
+                version = "0.0.1"
+                authors = []
+
+                [dependencies]
+                baz = "0.0.1"
+            "#,
+        )
+        .file(
+            "src/lib.rs",
+            "extern crate baz; pub fn foo() { baz::bar(); }",
+        )
+        .build();
+
+    p.cargo("build")
+        .with_status(101)
+        .with_stderr(
+            "\
+[ERROR] no matching package named `baz` found
+location searched: registry `crates-io`
+required by package `foo v0.0.1 ([..]/foo)`
+",
+        )
+        .run();
+}
+
 #[cargo_test]
 fn depend_on_yanked() {
     setup();