snapshot_gen is not updated at the err: label of __clayered_iterate when WT_PREPARE_CONFLICT is returned. On the retry call, __clayered_adjust_state detects a spurious snapshot change (0 vs non-zero) and clears WT_CLAYERED_ITERATE_NEXT, causing an assertion in __clayered_iterate_constituents. Fix: on a fresh-start prepare conflict, reset cursors and clear flags so the next call restarts cleanly. Regression test in test/suite/test_layered_prepare03.py.