[BUG] VS Code extension regression starting >2.0.70

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?

It appears that after 2.0.70 (up to 2.0.75 which is current at the moment) that the VS Code extension is broken on Windows 11.
Sending requests results in an infinite wait.
Attempting to /login results in a page with "Signing in" forever with no redirection.

Manually bisecting to identify which VS Code extension version was the last working indicated that 2.0.70 was working properly and that since then the extension is broken.

What Should Happen?

Claude should be handling input properly and letting users /login.

Error Messages/Logs

I looked at the VS Code extension logs but could not find anything relevant to this issue.

Steps to Reproduce

1. Install the VS Code extension version 2.0.75.
2. Attempt to /login.
3. The extension shows "Signing in" but nothing happens.

1. Install the VS Code extension version 2.0.75.
2. Send 1+1.
3. The request hangs indefinitely.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.0.70 (of the extension, not claude)

Claude Code Version

2.0.76

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_