diff --git a/code/lib/builder-vite/src/list-stories.ts b/code/lib/builder-vite/src/list-stories.ts
index 08be02004df1..de8c86d6ff62 100644
--- a/code/lib/builder-vite/src/list-stories.ts
+++ b/code/lib/builder-vite/src/list-stories.ts
@@ -13,7 +13,9 @@ export async function listStories(options: Options) {
       }).map(({ directory, files }) => {
         const pattern = path.join(directory, files);
 
-        return glob(path.isAbsolute(pattern) ? pattern : path.join(options.configDir, pattern));
+        return glob(path.isAbsolute(pattern) ? pattern : path.join(options.configDir, pattern), {
+          follow: true,
+        });
       })
     )
   ).reduce((carry, stories) => carry.concat(stories), []);
diff --git a/code/renderers/react/template/stories/hooks.stories.tsx b/code/renderers/react/template/stories/hooks.stories.tsx
new file mode 100644
index 000000000000..7d7388954eba
--- /dev/null
+++ b/code/renderers/react/template/stories/hooks.stories.tsx
@@ -0,0 +1,16 @@
+import React, { FC, useState } from 'react';
+
+const ButtonWithState: FC = () => {
+  const [count, setCount] = useState(0);
+  return (
+    <button type="button" onClick={() => setCount(count + 1)}>
+      {`count: ${count}`}
+    </button>
+  );
+};
+
+export default {
+  component: ButtonWithState,
+};
+
+export const Basic = {};
diff --git a/scripts/sandbox.ts b/scripts/sandbox.ts
index bdedf10e15d1..697b1a721a99 100644
--- a/scripts/sandbox.ts
+++ b/scripts/sandbox.ts
@@ -25,6 +25,8 @@ import { ConfigFile, readConfig, writeConfig } from '../code/lib/csf-tools';
 import { babelParse } from '../code/lib/csf-tools/src/babelParse';
 import TEMPLATES from '../code/lib/cli/src/repro-templates';
 import { servePackages } from './utils/serve-packages';
+import { filterExistsInCodeDir, codeDir } from './utils/filterExistsInCodeDir';
+import { JsPackageManagerFactory } from '../code/lib/cli/src/js-package-manager';
 
 type Template = keyof typeof TEMPLATES;
 const templates: Template[] = Object.keys(TEMPLATES) as any;
@@ -44,7 +46,6 @@ const defaultAddons = [
   'viewport',
 ];
 const sandboxDir = path.resolve(__dirname, '../sandbox');
-const codeDir = path.resolve(__dirname, '../code');
 const reprosDir = path.resolve(__dirname, '../repros');
 
 export const options = createOptions({
@@ -221,7 +222,7 @@ function addEsbuildLoaderToStories(mainConfig: ConfigFile) {
       ...config.modules,
       rules: [
         {
-          test: [/\\/code\\/[^/]*\\/[^/]*\\/template\\/stories\\//],
+          test: [/\\/template-stories\\//],
           loader: '${loaderPath}',
           options: {
             loader: 'tsx',
@@ -263,43 +264,42 @@ function addPreviewAnnotations(mainConfig: ConfigFile, paths: string[]) {
 }
 
 // paths are of the form 'renderers/react', 'addons/actions'
-async function addStories(paths: string[], { mainConfig }: { mainConfig: ConfigFile }) {
-  // Add `stories` entries of the form
-  //   '../../../code/lib/store/template/stories/*.stories.@(js|jsx|ts|tsx)'
+async function addStories(
+  packageDirs: string[],
+  { mainConfig, cwd }: { mainConfig: ConfigFile; cwd: string }
+) {
+  // Link `stories` directories
+  //   '../../../code/lib/store/template/stories' to 'src/templates/lib/store'
   // if the directory <code>/lib/store/template/stories exists
-  const extraStoryDirsAndExistence = await Promise.all(
-    paths
-      .map((p) => path.join(p, 'template', 'stories'))
-      .map(async (p) => [p, await pathExists(path.resolve(codeDir, p))] as const)
+  //
+  // We link rather than reference relative dir to avoid Running two versions
+  // of React in react-based projects
+  await Promise.all(
+    packageDirs.map(async (p) => {
+      const source = path.join(codeDir, p, 'template', 'stories');
+      await ensureSymlink(source, path.resolve(cwd, 'template-stories', p));
+    })
   );
 
   const stories = mainConfig.getFieldValue(['stories']) as string[];
-  const extraStories = extraStoryDirsAndExistence
-    .filter(([, exists]) => exists)
-    .map(([p]) => ({
-      directory: path.join('..', '..', '..', 'code', p),
-      titlePrefix: p.split('/').slice(-4, -2).join('/'),
-      files: '**/*.stories.@(js|jsx|ts|tsx)',
-    }));
-  mainConfig.setFieldValue(['stories'], [...stories, ...extraStories]);
+  // FIXME: '*.@(mdx|stories.mdx|stories.tsx|stories.ts|stories.jsx|stories.js'
+  const linkedStories = path.join('..', 'template-stories', '**', '*.stories.@(js|jsx|ts|tsx|mdx)');
+  mainConfig.setFieldValue(['stories'], [...stories, linkedStories]);
 
   // Add `config` entries of the form
   //   '../../code/lib/store/template/stories/preview.ts'
   // if the file <code>/lib/store/template/stories/preview.ts exists
-  const extraPreviewAndExistence = await Promise.all(
-    extraStoryDirsAndExistence
-      .filter(([, exists]) => exists)
-      .map(([storiesPath]) => path.join(storiesPath, 'preview.ts'))
-      .map(
-        async (previewPath) =>
-          [previewPath, await pathExists(path.resolve(codeDir, previewPath))] as const
-      )
+  const packageDirsWithPreview = await filterExistsInCodeDir(
+    packageDirs,
+    path.join('template', 'stories', 'preview.ts')
   );
 
-  const extraConfig = extraPreviewAndExistence
-    .filter(([, exists]) => exists)
-    .map(([p]) => path.join('..', '..', 'code', p));
-  addPreviewAnnotations(mainConfig, extraConfig);
+  const config = mainConfig.getFieldValue(['config']) as string[];
+  const extraConfig = packageDirsWithPreview.map((p) => {
+    const previewFile = path.join('template-stories', p, 'preview.ts');
+    return `./${previewFile}`;
+  });
+  mainConfig.setFieldValue(['config'], [...(config || []), ...extraConfig]);
 }
 
 type Workspace = { name: string; location: string };
@@ -320,6 +320,23 @@ function workspacePath(type: string, packageName: string, workspaces: Workspace[
   return workspace.location;
 }
 
+function addExtraDependencies({
+  cwd,
+  dryRun,
+  debug,
+}: {
+  cwd: string;
+  dryRun: boolean;
+  debug: boolean;
+}) {
+  const extraDeps = ['@storybook/jest'];
+  if (debug) console.log('🎁 Adding extra deps', extraDeps);
+  if (!dryRun) {
+    const packageManager = JsPackageManagerFactory.getPackageManager(false, cwd);
+    packageManager.addDependencies({ installAsDevDependencies: true }, extraDeps);
+  }
+}
+
 export async function sandbox(optionValues: OptionValues<typeof options>) {
   const { template, forceDelete, forceReuse, dryRun, debug, fromLocalRepro } = optionValues;
 
@@ -405,7 +422,14 @@ export async function sandbox(optionValues: OptionValues<typeof options>) {
     for (const addon of [...defaultAddons, ...optionValues.addon]) {
       storiesToAdd.push(workspacePath('addon', `@storybook/addon-${addon}`, workspaces));
     }
-    await addStories(storiesToAdd, { mainConfig });
+    const existingStories = await filterExistsInCodeDir(
+      storiesToAdd,
+      path.join('template', 'stories')
+    );
+    await addStories(existingStories, {
+      mainConfig,
+      cwd,
+    });
 
     // Add some extra settings (see above for what these do)
     mainConfig.setFieldValue(['core', 'disableTelemetry'], true);
@@ -451,6 +475,9 @@ export async function sandbox(optionValues: OptionValues<typeof options>) {
       );
     }
 
+    // Some addon stories require extra dependencies
+    addExtraDependencies({ cwd, dryRun, debug });
+
     await addPackageScripts({
       cwd,
       scripts: {
diff --git a/scripts/utils/filterExistsInCodeDir.ts b/scripts/utils/filterExistsInCodeDir.ts
new file mode 100644
index 000000000000..43204a227bb8
--- /dev/null
+++ b/scripts/utils/filterExistsInCodeDir.ts
@@ -0,0 +1,15 @@
+import path from 'path';
+import { pathExists } from 'fs-extra';
+
+export const codeDir = path.resolve(__dirname, '../../code');
+
+// packageDirs of the form `lib/store`
+// paths to check of the form 'template/stories'
+export const filterExistsInCodeDir = async (packageDirs: string[], pathToCheck: string) =>
+  (
+    await Promise.all(
+      packageDirs.map(async (p) =>
+        (await pathExists(path.resolve(codeDir, path.join(p, pathToCheck)))) ? p : null
+      )
+    )
+  ).filter(Boolean);