[BUG] Cowork session resume loop burns context in minutes, locks session with "Prompt is too long" — Windows 11 Home, Max plan

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?

When starting a Cowork session that has any prior history, Cowork enters a resume loop — repeatedly saying "I'll pick up right where we left off" and "Let me launch multiple analyses in parallel" without doing any actual work. This loop burns through the entire context window in under 3 minutes, ending in a permanent "Prompt is too long" / "This conversation is too long to continue" error that locks the session completely with no recovery path.
This is not a one-time occurrence. It has happened consistently across multiple sessions.

What Should Happen?

Cowork should execute the assigned task without looping. If resuming a prior session, it should not repeatedly re-initialize. The context window should be managed gracefully with warnings before the limit is hit, and there should be a recovery path when context is exhausted rather than a permanent session lockout that forces the user to lose all work.

Error Messages/Logs

Something went wrong — Prompt is too long
This conversation is too long to continue. Start a new session, or remove some tools to free up space.

Steps to Reproduce

Start a Cowork session with a broad research task
Allow it to run — it will loop rather than execute
Within 2–3 minutes, session hits context limit
"Prompt is too long" appears and every subsequent input returns the same error
Session is unrecoverable — must start over and lose all context

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

1.1.5368 (d12d02)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Windows Terminal

Additional Information

What's Wrong?
When starting a Cowork session that has any prior history, Cowork enters a resume loop — repeatedly saying "I'll pick up right where we left off" and "Let me launch multiple analyses in parallel" without doing any actual work. This loop burns through the entire context window in under 3 minutes, ending in a permanent "Prompt is too long" / "This conversation is too long to continue" error that locks the session completely with no recovery path.
This is not a one-time occurrence. It has happened consistently across multiple sessions.
Errors encountered:

Something went wrong — Prompt is too long
This conversation is too long to continue. Start a new session, or remove some tools to free up space.

What the loop looks like (from session "Analyze safety compliance and sales issues"):
"I'll pick up right where we left off — diving into Quick Safety Compliance's online presence..."
[Updated todo list]
"Let me pick up right where we left off and actually dig into the analysis this time..."
[Updated todo list]
"Alright Diana, let's get this done! I'm jumping straight into the analysis — no more delays..."
[Updated todo list]
"Diana, I'm picking up immediately — no more delays. Let me run all the research tracks in parallel..."
[Updated todo list]
→ "Prompt is too long"
→ "Something went wrong — This conversation is too long to continue."
6+ repeated restarts, zero actual work completed, session permanently locked.

Steps to Reproduce

Start a Cowork session with a broad research task
Allow it to run — it will loop rather than execute
Within 2–3 minutes, session hits context limit
"Prompt is too long" appears and every subsequent input returns the same error
Session is unrecoverable — must start over and lose all context

What Should Happen?

Cowork should execute the task, not loop on restarts
If resuming a prior session, it should not re-initialize repeatedly
Context warnings should appear before the limit is hit
There should be a recovery path when context is exhausted — not a permanent lockout

Impact
This makes Cowork completely unusable for any multi-step or research task. Combined with ongoing VirtioFS/VM crash issues on Windows Home (see #29848), Cowork has been non-functional for weeks on this plan. Usage limits are consumed on failed loops with no productive output.
Related issues: #29848, #26554, #23377, #21 (compaction death spiral), #26171 (unbounded thinking loops)

Environment

OS: Windows 11 Home
Claude Desktop: v1.1.4498
Plan: Max ($200/month)
Platform: Anthropic API