Auto-compact blocks workflow with warning instead of continuing silently

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?

With auto-compact set to true in config, Claude Code stops and displays a warning "Context low · Run /compact to compact & continue" at ~7% context remaining instead of continuing and auto-compacting when needed.
Previously, it would continue working and automatically compact when context was nearly full. Now the workflow is interrupted and requires manual intervention.
Pressing Enter doesn't dismiss the warning - I have to manually type /compact.
Environment

Claude Code version: 2.0.76
OS: Windows 11
Installation method: Standalone installer (not npm)

What Should Happen?

Expected behavior
With auto-compact enabled, Claude Code should continue working without interruption and automatically compact when context runs out, not stop with a warning at 7%.

<img width="1483" height="1153" alt="Image" src="https://github.com/user-attachments/assets/9929135a-dd9e-4cd6-9e60-9cc0492608c7" />

<img width="1483" height="1153" alt="Image" src="https://github.com/user-attachments/assets/3c471cc6-b032-4c55-92c9-3f6ed6727202" />

Error Messages/Logs

Steps to Reproduce

Have a session reaching 7% of the context window. I get the attached message instead of having it compacting automatically.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

very recently

Claude Code Version

2.0.76 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

_No response_