[BUG] Claude Code for VSCode memory regression in 2.1.78

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?

Good morning. My extension updated overnight from 2.1.77 -> 2.1.78. Every time Claude is writing to its memory files its ignoring set permissions to Edit or Bypass and is prompting for permission to write to the files. While this appears to be a necessary security enhancement, its takes away for the flow to stop and approve each edit being processed.

What Should Happen?

If I have Bypass permissions enabled, it should respect my settings and not prompt for permission. Its my responsibility if something happens when I have this set.

Error Messages/Logs

Screenshots from local session:
<img width="1232" height="389" alt="Image" src="https://github.com/user-attachments/assets/72fca312-b0eb-4e78-bc2a-9319b906271e" />

<img width="1235" height="282" alt="Image" src="https://github.com/user-attachments/assets/2f595ff4-164f-4dea-baac-ee7c5bf8dc47" />

Steps to Reproduce

1. Install 2.1.78
2. Have Claude perform the same test that I did:

<img width="1216" height="91" alt="Image" src="https://github.com/user-attachments/assets/10bd5055-473d-410d-bdea-bcbb91fb9bb5" />

1. Claude will prompt to write the memory file and ignore the Bypass setting

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.77

Claude Code Version

2.1.77

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_