[BUG] VSCode Extension Fails: "Cannot dynamically configure MCP when enterprise config is present"

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?

The Claude Code VSCode extension (v2.0.60) fails to launch in all directories/projects with the error:

You cannot dynamically configure your MCP configuration when an enterprise MCP config is present

This occurs despite using a personal Claude Pro account (not an enterprise account). The issue appears to be caused by an auto-registered shadcn MCP server that Claude Code marks as "Enterprise config (managed by your organization)" when it detects a components.json file in any project. Once this "enterprise" MCP config exists, it globally prevents the VSCode extension from working in all directories, not just shadcn projects.

What Should Happen?

The VSCode extension should work with personal Pro accounts, even when shadcn MCP server is present.

Error Messages/Logs

### 1. MCP Server Status

$ claude mcp get shadcn
shadcn:
  Scope: Enterprise config (managed by your organization)
  Status: ✓ Connected

To remove this server, run: claude mcp remove "shadcn" -s enterprise


### 2. Cannot Remove Enterprise MCP Server

$ claude mcp remove "shadcn" -s enterprise
Error: Cannot remove MCP server from scope: enterprise


### 3. VSCode Extension Logs

2025-12-06 17:57:17.426 [info] Spawning Claude with SDK query function - cwd: /Users/matthew/Documents/GitHub/SequoiaProductLabs/app-pkm, permission mode: default, version: 2.0.60

2025-12-06 17:57:17.426 [info] From claude: Spawning Claude Code native binary: /opt/homebrew/bin/claude [...] --mcp-config {"mcpServers":{"claude-vscode":{"type":"sdk","name":"claude-vscode"}}} [...]

2025-12-06 17:57:17.919 [info] From claude: You cannot dynamically configure your MCP configuration when an enterprise MCP config is present

2025-12-06 17:57:17.971 [error] Error from Claude (on channel 0w2bspgqlvse): Error: Claude Code process exited with code 1

Steps to Reproduce

1. Have shadcn MCP server auto-registered as "enterprise" scope (happens when Claude Code 2.0.60 detects a components.json file in any project)
2. Install Claude Code VSCode extension v2.0.60
3. Attempt to use the extension in any directory/project (even ones without shadcn)
4. Extension fails immediately with error

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.60

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_