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Ah! Sorry, I was under the impression that the filenames were the same but the 'tif' filename only contains the psd filename...right?

If that's the case then this should fix it:

[CODE=jsx]// Prompt user to select Source and Destination folders

var sourceFolder = Folder.selectDialog("Select Source Folder");

var destFolder = Folder.selectDialog("Select Destination Folder");

if (sourceFolder && destFolder) {

var sourceFiles = sourceFolder.getFiles("*.psd");

var destFiles = destFolder.getFiles("*.tif");

for (var i = 0; i < sourceFiles.length; i++) {

var sourceFile = new File(sourceFiles);                                                                    // ** EDITED **

var sourceFileName = sourceFile.name.replace(/\.[^.]+$/, ""); // Remove extension

for (var j = 0; j < destFiles.length; j++) {

var destFile = destFiles[j];

var destFileName = destFile.name.replace(/\.[^.]+$/, ""); // Remove extension

if (destFileName.indexOf(sourceFileName) !== -1) {

var sourceDoc = app.open(sourceFile);            

var destDoc = app.open(destFile);        

// Duplicate the background layer from destination

var destBackgroundLayer = destDoc.artLayers[0];                                                              // ** BLOCK MOVED TO BEFORE 'DELETE LAYER 1' **

var sourceLayer = destBackgroundLayer.duplicate(sourceDoc, ElementPlacement.PLACEATBEGINNING);

app.activeDocument = sourceDoc;                                                                             // ** ADDED **

// Delete Layer 1 in source document

if (sourceDoc.layers.length > 0) {                                                                          // ** BLOCK MOVED TO AFTER 'DUPLICATE LAYER' **

sourceDoc.layers[sourceDoc.layers.length - 1].remove();

}

// Loop through layers in source document

for (var k = sourceDoc.layers.length - 1; k >= 0; k--) {

var sourceChildLayer = sourceDoc.layers[k];

var sourceParentLayer = sourceChildLayer.parent;

// Check if the source layer is a clipping mask

if (sourceChildLayer.grouped && sourceParentLayer) {

// Find the corresponding parent layer in destination

var destParentLayerName = sourceParentLayer.name;

var destParentLayer = destDoc.layers.getByName(destParentLayerName);

if (destParentLayer) {

sourceChildLayer.duplicate(destParentLayer, ElementPlacement.PLACEATBEGINNING);

}

}

}

// Save modified source file in destination folder with PSD file name

var newFileName = destFileName + "_modified.psd";                                                // ** CHANGED 'sourceFileName' TO 'destFileName'  **

var saveName = new File(decodeURI(destFolder + "/" + newFileName));                            // ** EDITED **

sourceDoc.saveAs(saveName);                                                                     // ** EDITED **

sourceDoc.close(SaveOptions.DONOTSAVECHANGES);

destDoc.close(SaveOptions.DONOTSAVECHANGES);

// break; // Once matched, move to the next source file                                       // ** NOT REQUIRED **

}

}

}

} else {

alert("Please select both Source and Destination folders.");

}[/CODE]

Sorry for the missunderstanding.

Regards.

MrToM.