[BUG] VSCode extension, up arrow replaces existing prompt

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

In the VSCode extensions, pressing up arrow in the prompt field overwrites the entire current prompt you're assembling with the previous prompt.

This means that as you're assembling the new prompt, you often lose your work if you press up arrow too many times while trying to scroll to the top of your new prompt.

What Should Happen?

Up arrow should replace the current prompt with the previous prompt _only if_ the current prompt is empty.

Error Messages/Logs

Steps to Reproduce

In the VS Code extension...

Prompt something
Then start a new prompt. Paste some error messages in, etc.
Now hit the up arrow a few times. Your prompt will be overwritten.

It is possible to hit the down arrow many times to return to your in-progress prompt, but can be VERY difficult depending on how long your previous prompt was.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.36

Platform

Other

Operating System

Windows

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_