[BUG] Extension fails with "cygpath -u" error on Windows despite cygpath being available

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 Claude Code VSCode extension fails to execute any tool (Bash, Read, etc.) on Windows with MSYS/Git Bash environment. All operations fail with a cygpath error, even though cygpath works correctly in VSCode's integrated terminal.

What Should Happen?

Environment

• OS: Windows 10/11 (MSYS_NT-10.0-26100)
• VSCode Version: [your version]
• Claude Code Extension Version: [your version]
• Shell: Git Bash / MSYS2
• cygpath version: 3.6.5 (works in terminal)

Troubleshooting Attempted

• ✅ Added C:\Program Files\Git\usr\bin to system PATH
• ✅ Verified cygpath works in VSCode integrated terminal
• ✅ Reloaded VSCode window
• ✅ Completely restarted VSCode
• ✅ Added PATH to terminal.integrated.env.windows in settings.json
• ✅ Uninstalled and reinstalled the extension
• ❌ None of these resolved the issue

Expected Behavior

The extension should be able to use cygpath since it's available in the system PATH and works in VSCode's terminal.

Actual Behavior

The extension appears to run in an isolated environment that doesn't inherit the system PATH or VSCode terminal settings, causing all path conversions to fail.

Additional Context

Running which cygpath && cygpath --version directly in VSCode terminal works:
/usr/bin/cygpath
cygpath (cygwin) 3.6.5

But the same command through the extension fails before execution.

Error Messages/Logs

Error Message

Error calling tool (Read): Command failed: cygpath -u 'c:\Users...\file.json'

or

Command failed: cygpath -u 'C:\Users...\AppData\Local\Temp'

Steps to Reproduce

1. Install Claude Code extension on Windows with Git Bash
2. Open any project
3. Try to use any tool (Read a file, run a Bash command, etc.)
4. Error occurs immediately

Claude Model

Not sure / Multiple models

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.222

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_