Terminal rendering bugs: inconsistent bolding and blue text coloring

Description

Two visual rendering issues occur in the VS Code integrated terminal when using Claude Code:

1. Inconsistent Bolding

Markdown bold formatting (**text**) is being rendered with misaligned ANSI escape codes, causing partial words to appear bold instead of the intended text.

Example:

• Writing **Changes made:** in markdown renders with only partial characters bold (e.g., "made" instead of "Changes made:")
• The word "happening" renders as "happening"
• Random mid-word bolding throughout responses

2. Blue Text Coloring (persists after disabling file links)

Certain text appears in blue even after setting "terminal.integrated.enableFileLinks": "off" in VS Code user settings.

Example:

• Text containing ** characters like **Changes made:** appears blue
• Patterns with underscores or special characters get colored

Environment

• OS: Windows
• VS Code: Integrated terminal
• Claude Code: Latest version
• Terminal profile: PowerShell

Steps to Reproduce

1. Open Claude Code in VS Code integrated terminal
2. Ask Claude to provide a response with markdown formatting (bold text, headers, etc.)
3. Observe inconsistent bolding and blue coloring in the output

What Was Tried

• Setting "terminal.integrated.enableFileLinks": "off" - partially helped with blue text but didn't fully resolve
• Setting explicit font family (Cascadia Mono) and font weights (400/700) - did not resolve bolding issue
• Restarting terminal - issue persists

Expected Behavior

• Bold markdown (**text**) should render the complete intended text as bold
• Text should not appear blue when file link detection is disabled

Actual Behavior

• ANSI bold escape codes appear misaligned, causing random partial-word bolding
• Blue coloring persists on certain text patterns

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Note: Screenshots can be provided if needed to illustrate the rendering issues.