VSCode Extension v2.1.3 crashes repeatedly with exit code 1

Title

VSCode Extension v2.1.3 crashes repeatedly with exit code 1

Body

Environment

• OS: macOS Darwin 25.2.0
• VSCode: Latest
• Claude Code Extension: v2.1.3
• Machine RAM: 64GB (12GB free at time of crashes)

Issue Summary

The Claude Code VSCode extension crashes repeatedly with "Error: Claude Code process exited with code 1". This happens regardless of session type, activity, or other extensions.

Crash Frequency

On 2026-01-09, experienced 6+ crashes in a single day:

| Time | Session Type | Duration Before Crash |
|------|--------------|----------------------|
| ~13:15 | Fresh | ~95 min |
| ~14:30 | Compacted | ~25 min |
| ~15:00 | Compacted | ~5-10 min |
| ~18:35 | Compacted | ~3 min |
| ~18:45 | Fresh | ~5 min |
| ~18:50 | Fresh | ~5 min |

Evidence from Debug Logs

Found repeated 403 errors during summarization in ~/.claude/debug/:

2026-01-09T14:08:30.916Z [DEBUG] Summarizing all 11 messages (~431 tokens)
2026-01-09T14:08:31.220Z [ERROR] AxiosError: Request failed with status code 403

2026-01-09T14:08:45.007Z [DEBUG] Summarizing last 521 of 534 messages (~142591 tokens)
2026-01-09T14:08:46.229Z [ERROR] AxiosError: Request failed with status code 403

The 403 errors repeat every ~15 seconds until the extension crashes.

What Was Ruled Out

• Context compaction - Fresh sessions crash just as often
• Other extensions - Disabled all other AI extensions, still crashes
• System resources - 64GB RAM, 88% CPU idle
• Memory settings - Tried 16GB Node heap allocation

Also Observed

• MCP error -32601: Method not found appears in logs before some crashes
• Repeated npm permission errors every 30 min: Insufficient permissions for global npm install

Steps to Reproduce

1. Use Claude Code VSCode extension normally
2. Wait - crashes occur randomly within minutes to hours
3. Extension exits with code 1

Expected Behavior

Extension should remain stable during normal use.

Additional Context

This is severely impacting development workflow. Background processes (servers started via Claude) are killed when the extension crashes, requiring constant restarts.