So somehow OS X allowed me to create a folder with the name "assets\rassets\rassets". Yep, those are \r linebreaks.
Now I've renamed it, but git can't find it to remove it.
git rm "assets\rassets\rassets/default_app_icon.psd"
fatal: pathspec 'assets\rassets\rassets/default_app_icon.psd' did not match any files
All combinations of escaping with \ and " don't do anything.