diff --git a/.gts-spec b/.gts-spec
index 5e17b3a..4b8f509 160000
--- a/.gts-spec
+++ b/.gts-spec
@@ -1 +1 @@
-Subproject commit 5e17b3ac52ae8754f5cd4344608a1906359ef393
+Subproject commit 4b8f5090fc9262a6b69c0aa136b3e24e16c1c6c2
diff --git a/gts/src/gts/entities.py b/gts/src/gts/entities.py
index ee57b7e..b8b2356 100644
--- a/gts/src/gts/entities.py
+++ b/gts/src/gts/entities.py
@@ -86,6 +86,7 @@ class GtsEntity:
     selected_entity_field: Optional[str] = None
     selected_schema_id_field: Optional[str] = None
     description: str = ""
+    raw_id: Optional[str] = None  # Stores raw ID value (may be non-GTS)
     schemaRefs: List[Dict[str, str]] = field(default_factory=list)
 
     def __init__(
@@ -122,6 +123,7 @@ def __init__(
         # Calculate IDs if config provided
         if cfg is not None:
             idv = self._calc_json_entity_id(cfg)
+            self.raw_id = idv  # Store raw ID even if non-GTS
             self.schemaId = self._calc_json_schema_id(cfg)
             # If no valid GTS ID found in entity fields, use schema ID as fallback
             if not (idv and GtsID.is_valid(idv)):
@@ -289,13 +291,11 @@ def _get_field_value(self, field: str) -> Optional[str]:
         return None
 
     def _first_non_empty_field(self, fields: List[str]) -> Optional[Tuple[str, str]]:
-        """Find first non-empty field, preferring valid GTS IDs."""
-        # First pass: look for valid GTS IDs
-        for f in fields:
-            v = self._get_field_value(f)
-            if v and GtsID.is_valid(v):
-                return f, v
-        # Second pass: any non-empty string
+        """Find first non-empty field value in order.
+
+        Returns the first non-empty string value without preferring GTS IDs.
+        This ensures UUID and non-GTS values are returned when they appear first.
+        """
         for f in fields:
             v = self._get_field_value(f)
             if v:
@@ -311,22 +311,74 @@ def _calc_json_entity_id(self, cfg: GtsConfig) -> str:
             return f"{self.file.path}#{self.list_sequence}"
         return self.file.path if self.file else ""
 
-    def _calc_json_schema_id(self, cfg: GtsConfig) -> str:
+    def _calc_json_schema_id(self, cfg: GtsConfig) -> Optional[str]:
+        """Calculate schema_id based on entity type and content.
+
+        Rules:
+        - For schemas: extract parent from $id chain, or fallback to $schema
+        - For instances: look for type/schema fields in schema_id_fields
+        - Return None if no schema reference found for instances
+        """
+        # For schemas, derive from the entity ID (parent of chain)
+        if self.is_schema:
+            # Get entity ID (the $id field for schemas)
+            idv = self._get_field_value("$id")
+            if idv and GtsID.is_valid(idv):
+                # Check if it's a chained ID (derived schema)
+                last_tilde = idv.rfind("~")
+                if last_tilde > 0:
+                    # Find the previous segment (parent)
+                    parent_end = last_tilde
+                    # Check if there's another segment before this one
+                    prefix = idv[:parent_end]
+                    prev_tilde = prefix.rfind("~")
+                    if prev_tilde > 0:
+                        # Has a parent chain - return first segment (base type)
+                        self.selected_schema_id_field = "$id"
+                        return prefix[: prev_tilde + 1]
+                    else:
+                        # Single segment schema - base type, return $schema
+                        schema_val = self._get_field_value("$schema")
+                        if schema_val:
+                            self.selected_schema_id_field = "$schema"
+                            return schema_val
+            # Fallback to $schema for schemas
+            schema_val = self._get_field_value("$schema")
+            if schema_val:
+                self.selected_schema_id_field = "$schema"
+                return schema_val
+            return None
+
+        # For instances, look in schema_id_fields
         cand = self._first_non_empty_field(cfg.schema_id_fields)
         if cand:
             self.selected_schema_id_field = cand[0]
-            return cand[1]
-        idv = self._calc_json_entity_id(cfg)
-        if idv and isinstance(idv, str) and GtsID.is_valid(idv):
-            if idv.endswith("~"):
-                return idv
-            last = idv.rfind("~")
-            if last > 0:
-                self.selected_schema_id_field = self.selected_entity_field
-                return idv[: last + 1]
-        if self.file and self.list_sequence is not None:
-            return f"{self.file.path}#{self.list_sequence}"
-        return self.file.path if self.file else ""
+            schema_id = cand[1]
+            # If schema_id is a chained GTS ID, extract parent (base type)
+            if GtsID.is_valid(schema_id):
+                last_tilde = schema_id.rfind("~")
+                if last_tilde > 0 and not schema_id.endswith("~"):
+                    # It's an instance ID in type field - extract schema part
+                    return schema_id[: last_tilde + 1]
+            return schema_id
+
+        # For instances with chained GTS ID in entity_id field, derive schema_id
+        # BUT only if the ID is a proper chained instance ID (not a single schema segment)
+        if self.selected_entity_field and self.selected_entity_field != "$id":
+            # Only derive from fields like "id", not from "$id" (which is for schemas)
+            idv = self._get_field_value(self.selected_entity_field)
+            if idv and GtsID.is_valid(idv):
+                # Check if it's a chained ID (instance ID) vs single segment (schema ID)
+                if not idv.endswith("~"):
+                    # Instance ID: extract schema part (everything up to and including last ~)
+                    last_tilde = idv.rfind("~")
+                    if last_tilde > 0:
+                        self.selected_schema_id_field = self.selected_entity_field
+                        return idv[: last_tilde + 1]
+
+        # No schema reference found for instance
+        # Note: Single-segment schema IDs in $id don't count as schema_id for instances
+        return None
 
     def _extract_uuid_from_content(self) -> Optional[str]:
         """Extract a UUID value from content to use as instance identifier."""
diff --git a/gts/src/gts/ops.py b/gts/src/gts/ops.py
index e1a2512..d7ccad3 100644
--- a/gts/src/gts/ops.py
+++ b/gts/src/gts/ops.py
@@ -199,6 +199,7 @@ def to_dict(self) -> Dict[str, Any]:
             result["is_schema"] = self.is_schema
         else:
             result["error"] = self.error
+            result["is_schema"] = self.is_schema
         return result
 
 
@@ -315,12 +316,22 @@ def add_entity(
         self, content: Dict[str, Any], validate: bool = False
     ) -> GtsAddEntityResult:
         entity = GtsEntity(content=content, cfg=self.cfg)
-        if not entity.gts_id:
+
+        # For instances (non-schemas), require an id field
+        if not entity.is_schema:
+            # Instance must have an id from entity_id_fields (not just derived from schema)
+            if not entity.raw_id or not entity.selected_entity_field:
+                return GtsAddEntityResult(
+                    ok=False, error="Instance must have an id field", is_schema=False
+                )
+
+        # Schemas MUST have a valid GTS ID
+        if entity.is_schema and not entity.gts_id:
             return GtsAddEntityResult(
-                ok=False, error="Unable to detect GTS ID in entity"
+                ok=False, error="Unable to detect GTS ID in schema"
             )
 
-        # Register the entity first
+        # Register the entity (use raw_id for non-GTS instances)
         self.store.register(entity)
 
         # Always validate schemas
@@ -333,7 +344,7 @@ def add_entity(
                 )
 
         # If validation is requested, validate the instance as well
-        if validate and not entity.is_schema:
+        if validate and not entity.is_schema and entity.gts_id:
             try:
                 self.store.validate_instance(entity.gts_id.id)
             except Exception as e:
@@ -341,9 +352,11 @@ def add_entity(
                     ok=False, error=f"Validation failed: {str(e)}"
                 )
 
+        # Return gts_id if available, otherwise raw_id
+        entity_id = entity.gts_id.id if entity.gts_id else (entity.raw_id or "")
         return GtsAddEntityResult(
             ok=True,
-            id=entity.gts_id.id,
+            id=entity_id,
             schema_id=entity.schemaId,
             is_schema=entity.is_schema,
         )
@@ -460,8 +473,12 @@ def attr(self, gts_with_path: str) -> GtsPathResolver:
 
     def extract_id(self, content: Dict[str, Any]) -> GtsExtractIdResult:
         entity = GtsEntity(content=content, cfg=self.cfg)
+        # Always use raw_id - that's the actual value found in the entity_id_fields
+        # Note: gts_id may be derived from schemaId as fallback, but extract-id
+        # should return what was actually in the selected field
+        id_value = entity.raw_id or ""
         return GtsExtractIdResult(
-            id=entity.gts_id.id if entity.gts_id else "",
+            id=id_value,
             schema_id=entity.schemaId,
             selected_entity_field=entity.selected_entity_field,
             selected_schema_id_field=entity.selected_schema_id_field,
diff --git a/gts/src/gts/server.py b/gts/src/gts/server.py
index 21dc9bd..5bb667f 100644
--- a/gts/src/gts/server.py
+++ b/gts/src/gts/server.py
@@ -288,7 +288,9 @@ def _register_routes(self) -> None:
     async def add_entity(
         self, body: Dict[str, Any] = Body(...), validate: bool = Query(False)
     ) -> JSONResponse:
-        return JSONResponse(self.ops.add_entity(body, validate=validate).to_dict())
+        result = self.ops.add_entity(body, validate=validate)
+        status_code = 200 if result.ok else 422
+        return JSONResponse(result.to_dict(), status_code=status_code)
 
     async def add_entities(
         self, body: List[Dict[str, Any]] = Body(...)
diff --git a/gts/src/gts/store.py b/gts/src/gts/store.py
index 37252a3..4d3210a 100644
--- a/gts/src/gts/store.py
+++ b/gts/src/gts/store.py
@@ -134,10 +134,18 @@ def _populate_from_reader(self) -> None:
                 self._by_id[entity.gts_id.id] = entity
 
     def register(self, entity: GtsEntity) -> None:
-        """Register a JsonEntity in the store."""
-        if not entity.gts_id or not entity.gts_id.id:
-            raise ValueError("Entity must have a valid gts_id")
-        self._by_id[entity.gts_id.id] = entity
+        """Register a GtsEntity in the store.
+
+        If entity has a valid gts_id, use that as the key.
+        Otherwise, use raw_id for non-GTS entities.
+        """
+        if entity.gts_id and entity.gts_id.id:
+            self._by_id[entity.gts_id.id] = entity
+        elif entity.raw_id:
+            # Allow non-GTS entities with raw_id (e.g., UUIDs or simple strings)
+            self._by_id[entity.raw_id] = entity
+        else:
+            raise ValueError("Entity must have a valid gts_id or raw_id")
 
     def register_schema(self, type_id: str, schema: Dict[str, Any]) -> None:
         """