[BUG] Cowork VM fails — 0x80070005 access denied on rootfs.vhdx, permissions lost on every reinstall (Win 11 Pro 25H2)

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?

Cowork has never successfully launched on my machine.

OS: Windows 11 Pro 25H2, Build 26200.8037
Claude Desktop: v1.1.7714
Plan: Pro

Error: "VM service not running. The service failed to start."
Log shows HRESULT 0x80070005 — access denied on rootfs.vhdx (VM ID: 960E110C-FC59-5B4B-843D-68737D617893). Tried reinstalling as Administrator, enabling all virtualization features via PowerShell, adding Windows Defender exclusions, and manually granting NT VIRTUAL MACHINE full permissions via icacls. The icacls command succeeds but every reinstall wipes the VM bundle and recreates it, losing permissions each time. Download never initiates — log loops on deleteVMBundle indefinitely with no network activity. Related to #32004.

What Should Happen?

Cowork should start successfully and the VM should remain running without permission errors

Error Messages/Logs

HCS operation failed: failed to start VM: HcsWaitForOperationResult failed with HRESULT 0x80070005: Access is denied.
'cowork-vm' failed to start. (Virtual machine ID 960E110C-FC59-5B4B-843D-68737D617893)
Account does not have permission to open attachment rootfs.vhdx (Lun 0). Error: Access is denied (0x80070005).
Log loops on deleteVMBundle / Module loaded successfully with no download activity.
icacls fix succeeds but permissions are wiped on every reinstall attempt.

Steps to Reproduce

1. Install Claude Desktop v1.1.7714 on Windows 11 Pro 25H2 Build 26200.8037
2. Enable Hyper-V, VirtualMachinePlatform, and HypervisorPlatform via PowerShell as Administrator
3. Open Claude Desktop and navigate to Cowork tab
4. Observe: "Failed to start Claude's workspace — VM service not running"
5. Add Windows Defender exclusions for Claude AppData folders
6. Run icacls to grant NT VIRTUAL MACHINE full permissions on rootfs.vhdx — succeeds
7. Click "reinstall the workspace" — bundle is deleted and recreated, permissions lost
8. Repeat indefinitely — download never initiates

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

Claude 1.1.7714 (3bd6f6) 2026-03-19T14:50:53.000Z

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

This is a Cowork issue, not a Claude Code CLI issue.
VM ID: 960E110C-FC59-5B4B-843D-68737D617893
Claude Desktop version: 1.1.7714
Windows Defender exclusions added for both AppData paths.
Network setup includes OPNsense router with ZenArmour — possible deep packet inspection may be blocking VM bundle download, though AdGuard has been disabled at all levels.
icacls permission fix works temporarily but is wiped on every reinstall cycle.
Related to issue #32004 (now locked).