[BUG] VS Code extension is broken: compact has unexpected behavior (I know Antrophic won't read this...)

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?

With dozens of issues being reported every minute I know the Antrophic team won't likely address this issue, but it is very frustrating that the VS Code extension is being left behind and many issues seem to be accumulating with each new release.

Ever since version 2 (I'm obviously using v2.1.38), compact is extremely erratic:

• it will say "prompt too long" with a long context window still available.
• auto compact won't trigger or trigget but after it's done, any prompt will return "prompt too long"
• manual compact won't work, saying "prompt to long"
• the percentage of context available is not accurate, you have to rely on /context for a real value
• you cannot port from terminal to vs code, the session list is just different, and you have to find the session id to resume in terminal

The VS Code extension has so much potential but Antrophic seems to be definitely focused on the CLI...

What Should Happen?

Compaction should just work fine!...

Error Messages/Logs

Steps to Reproduce

Just use the vs code extension... the compact features are just broken.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

v2.1.38

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

I mean the terminal/shell dropdown doesn't even list the VS Code extension as an option... That's how much Antrophic cares about it...