[BUG] Session titles show model's reasoning preamble instead of generated title

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?

<img width="395" height="484" alt="Image" src="https://github.com/user-attachments/assets/e125e52c-02f7-421f-b75d-c76e9538e1e0" />

Since a recent VS Code extension update, session titles in the history sidebar display Claude's internal reasoning about generating a title instead of the actual title. Titles look like "Okay, let's tackle this. The user wants a short, prec..." or "Okay, let me try to figure out the best title for this..." — this is Claude's chain-of-thought response to the title generation prompt, not the extracted title. Older sessions still have correct titles (e.g., "Add tracking for clicked listings with marker styling").

What Should Happen?

Session titles should be concise, descriptive summaries of the conversation topic (e.g., "Add price and room filters with sliders"), with only the final generated title stored — not the model's reasoning preamble.

Error Messages/Logs

No error messages. The title generation completes without errors, but the full model response (including reasoning) is stored as the title instead of extracting just the title string.

Steps to Reproduce

1. Open Claude Code in VS Code (latest extension version)
2. Start a new session and send any prompt
3. Wait for the session title to be auto-generated
4. Open the session history sidebar
5. Observe that the title shows Claude's reasoning (e.g., "Okay, let's tackle this. The user wants a short, prec...") instead of a descriptive title
6. Compare with older sessions which still have correct titles

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.80 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_