[BUG] Windows VS Code Extension Fails to Load UI and Crashes CLI on Edit

Environment

• Platform (select one):
• [x] Anthropic API
• [ ] AWS Bedrock
• [ ] Google Vertex AI
• [ ] Other:
• Claude CLI version: 1.0.51
• Operating System: Windows 11
• Terminal: PowerShell, Command Prompt (within VS Code Integrated Terminal)

Bug Description

When using the Claude Code CLI (claude) within the VS Code integrated terminal on Windows 11 with the Claude Code VS Code extension installed, the application crashes when it attempts to apply file edits. Additionally, the Claude Code icon, which should appear in the VS Code Activity Bar, is missing. These issues seem specific to the VS Code integration, as the CLI functions correctly when run from an external terminal (e.g., Windows Terminal), and the extension works as expected in the Cursor IDE.

Steps to Reproduce

1. On Windows 11, install the Claude Code CLI.
2. Ensure VS Code is installed and that the code command is accessible from the system's PATH.
3. Ensure the Claude Code VS Code extension is installed.
4. Open a project folder in VS Code.
5. Open the integrated terminal (using either PowerShell or Command Prompt).
6. Run the claude command to start a new session. Observe the "IDE connected" message.
7. Open a source code file in the editor so it is the active document.
8. In the Claude terminal session, give a prompt to modify the currently active file (e.g., "add a comment to this file").
9. Wait for Claude to process the request and prepare the edit.
10. The CLI crashes at the moment it displays the confirmation prompt (Apply/Reject/etc.).## Expected Behavior
11. A Claude Code icon should be visible in the VS Code Activity Bar, allowing for one-click launching of the tool.
12. After requesting a file edit, the CLI should present a confirmation prompt (e.g., "Do you want to apply these changes?"). The application should remain stable, and upon confirmation, the edits should be applied to the file and visible in the VS Code editor.

Actual Behavior

1. The Claude Code extension icon does not appear in the VS Code Activity Bar.
2. The Claude Code CLI crashes immediately before it can display the file change confirmation prompt. The integrated terminal session terminates with the following error:

node:internal/process/promises:394
    triggerUncaughtException(err, true /* fromPromise */);
    ^

Error: cannot open _claude_fs_right:<path_to_file_to_be_edited>. Detail: Unable to resolve filesystem provider with relative file path '_claude_fs_right:<path_to_file_to_be_edited>'
    at Uq2 (file:///<local_user_path>/AppData/Roaming/npm/node_modules/@anthropic-ai/claude-code/cli.js:1383:14523)
    at process.processTicksAndRejections (node:internal/process/task_queues:105:5)
    at async iR6 (file:///<local_user_path>/AppData/Roaming/npm/node_modules/@anthropic-ai/claude-code/cli.js:1969:12396)
    at async J (file:///<local_user_path>/AppData/Roaming/npm/node_modules/@anthropic-ai/claude-code/cli.js:1969:11106)

Node.js v22.17.0

Additional Context

• The core functionality of the Claude Code CLI works correctly when run from a standalone Windows Terminal; it can successfully browse the project and apply file edits without crashing.
• The issue persists in a fresh installation of VS Code (this time using VS Code Insider rather than Stable), indicating it's not related to a corrupted VS Code profile.
• The extension was tested in the Cursor IDE and works perfectly: the icon appears, and file edits are applied without any crashes.
• Troubleshooting Steps Taken:
• Uninstalled and reinstalled the Claude Code extension from the VS Code Marketplace.
• Uninstalled the extension and attempted the automatic installation triggered by the CLI; the installation prompt did not appear.
• Confirmed that the code command is correctly configured in the system's PATH.