[BUG] Terminal output corrupted - only tool results display correctly (Windows 10)

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?

 ## Bug Description

 Claude Code's regular text responses are severely corrupted in the terminal. Only fragments of text appear with most content replaced by
 whitespace. However, file tool results (like Write tool output) display perfectly.

 ## Environment

 - **OS:** Windows 10
 - **Claude Code Version:** 2.0.73
 - **Terminals Tested:**
   - Command Prompt
   - PowerShell
   - Windows Terminal
 - **All terminals exhibit the same issue**

 ## Expected Behavior

 Assistant text responses should display fully and clearly in the terminal.

 ## Actual Behavior

 - Regular text responses: Show fragments with missing words and large gaps of whitespace
 - Tool results (file operations): Display perfectly with no corruption
 - Only the last line of regular responses is sometimes visible

 ## Reproduction Steps

 1. Install Claude Code 2.0.73 on Windows 10
 2. Open any terminal (Command Prompt, PowerShell, or Windows Terminal)
 3. Start a conversation with Claude: `claude`
 4. Observe that assistant text responses are corrupted
 5. Notice that when Claude uses the Write tool, the file content displays correctly

 ## Example

 When Claude responds with regular text, I see:
 ```
          roubleshoot the missing words...


                                          terminal...
 ```

 When Claude uses Write tool to create a file, I see the complete content perfectly in the tool result.

 ## Workaround

 Currently using file-based communication - Claude writes responses to a markdown file which I can read normally.

 ## Impact

 - Cannot use Claude Code normally for interactive development
 - Must rely on file outputs to read responses
 - Significantly impacts usability

 ## Additional Context

 - Tried `chcp 65001` for UTF-8 encoding - no effect
 - Tried `NO_COLOR=1` environment variable - no effect
 - Tried `--no-color` flag - no effect
 - Issue persists across all terminal emulators tested

### What Should Happen?

 ## Expected Behavior

 Assistant text responses should display fully and clearly in the terminal.

 ## Actual Behavior

 - Regular text responses: Show fragments with missing words and large gaps of whitespace
 - Tool results (file operations): Display perfectly with no corruption
 - Only the last line of regular responses is sometimes visible

### Error Messages/Logs

```shell
# Example

 When Claude responds with regular text, I see:
 
          roubleshoot the missing words...


                                          terminal...
 

 When Claude uses Write tool to create a file, I see the complete content perfectly in the tool result.

Steps to Reproduce

1. Install Claude Code 2.0.73 on Windows 10
2. Open any terminal (Command Prompt, PowerShell, or Windows Terminal)
3. Start a conversation with Claude: claude
4. Observe that assistant text responses are corrupted
5. Notice that when Claude uses the Write tool, the file content displays correctly

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.73

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Impact

• Cannot use Claude Code normally for interactive development
• Must rely on file outputs to read responses
• Significantly impacts usability

## Additional Context

• Tried chcp 65001 for UTF-8 encoding - no effect
• Tried NO_COLOR=1 environment variable - no effect
• Tried --no-color flag - no effect
• Issue persists across all terminal emulators tested