[Bug] MCP server "claude-vscode" fails with "Method not found" causing tool use concurrency 400 errors

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?

The VS Code extension's built-in MCP server (claude-vscode) fails to respond to tool queries, causing API Error 400 "tool use concurrency issues" within the first few tool calls of any session.
Key finding: The CLI (claude) works perfectly in the same environment. This isolates the issue to the VS Code/Cursor extension integration layer specifically.
Environment Info

Platform: linux (Ubuntu VPS via Remote SSH)
IDE: Cursor (VS Code fork)
Extension Version: 2.1.19
Node Version: v22.20
Connection: Local Cursor → Remote SSH → VPS

Error Sequence

1. MCP Server Startup (appears normal)

2026-01-24 18:10:49.570 [info] MCP Server running on port 54578 (localhost only)

1. MCP Server Fails to Respond to Tool Queries

2026-01-24T18:10:53.457Z [ERROR] MCP server "claude-vscode" Failed to fetch tools: MCP error -32601: Method not found

1. Subsequent API Call Fails with 400

2026-01-24T18:13:26.465Z [ERROR] Error in non-streaming fallback: 400
{"type":"error","error":{"type":"invalid_request_error","message":"messages.1: tool_use ids were found without tool_result blocks immediately after: toolu_015fSiUZTMAgdviidYPMr3Wj, toolu_01AkeMYQN3RBhWe274fNykPm, toolu_01Tg2qW2ogpYCgBdWyp6gg9B. Each tool_use block must have a corresponding tool_result block in the next message."}}
Troubleshooting Already Attempted
All of the following were attempted with no change in behaviour:

Full extension uninstall and reinstall
Cleared extension state (~/.cursor-server/data/User/globalStorage/anthropic.claude-code/)
Cleared extension files (~/.cursor-server/extensions/anthropic.claude-code-*)
Killed all lingering Claude processes (pkill -f claude)
Created missing skills directories (~/.claude/skills)
Reloaded VS Code window
Fresh install reproduces immediately

CLI Comparison
The CLI installed via npm install -g @anthropic-ai/claude-code works flawlessly in the same environment:

Same VPS
Same Node version
Same authentication (Claude Max via OAuth)
No MCP errors
No tool concurrency errors

This confirms the issue is specific to the VS Code extension's MCP server implementation, not the Claude Code core or API.
Hypothesis
The -32601: Method not found error suggests a protocol version mismatch. The extension's embedded MCP server may be expecting different method signatures than what the Claude Code binary is calling. This causes tool results to not be properly paired with tool calls, leading to the 400 error on the next API request.
Logs
Full extension logs available on request. Key sections included above.

What Should Happen?

Normal behaviour without concurrency errors.

Error Messages/Logs

Steps to Reproduce

Connect to remote Linux server via Cursor's Remote SSH
Install Claude Code extension (installs to remote server)
Open Claude Code panel and start a new conversation
Submit any prompt that triggers tool use (e.g., "check git status")
Error occurs within 1-3 tool calls

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.19

Platform

Anthropic API

Operating System

Ubuntu/Debian Linux

Terminal/Shell

Cursor

Additional Information

_No response_