[BUG]Claude Code VS Code extension hangs indefinitely - MCP server error and dual process spawn

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?

Claude Code in VS Code extension hangs and never returns a response. The extension spawns two Claude processes simultaneously (PIDs writing to the same config file), and the MCP server "claude-vscode" fails with error -32601 (Method not found). After several attempts, the extension host crashes with: "Extension host terminated unexpectedly 3 times within the last 5 minutes."

This issue is intermittent - it worked fine during the afternoon but started failing in the evening (Feb 15, 2026). Clearing cache, reinstalling the extension, and restarting VS Code did not resolve the issue.

What Should Happen?

Claude Code should launch a single process, connect to the MCP server successfully, and respond to user prompts without hanging.

Error Messages/Logs

[ERROR] MCP server "claude-vscode" Failed to fetch tools: MCP error -32601: Method not found

Two simultaneous processes writing to config:
- /Users/evan/.claude.json.tmp.51854.1771150539379
- /Users/evan/.claude.json.tmp.51855.1771150539447

Extension host terminated unexpectedly 3 times within the last 5 minutes.

Fast mode unavailable: Fast mode requires extra usage billing · /extra-usage to enable
Org fast mode: disabled (extra_usage_disabled)

Steps to Reproduce

1. Open VS Code with a project directory
2. Launch Claude Code extension
3. Type any prompt in the Claude Code chat
4. Claude Code shows loading spinner indefinitely - no response is ever returned
5. After multiple retries, extension host crashes

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

Same version (2.1.42) - worked in the afternoon of Feb 15, 2026

Claude Code Version

2.1.42

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

• Max subscription (100€/month)
• Settings files are clean: ~/.claude/settings.json is empty ({})
• No project-level settings.json exists
• Permissions file contains 112 allow rules (working normally)
• The issue coincides with multiple Anthropic service incidents during the week of Feb 10-15, 2026
• Clearing ~/Library/Application Support/ClaudeCode/Cache did not help
• Full reinstall of the extension did not help