[BUG] Cowork: CoworkVMService crashes with "Incorrect function" on Windows 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 gets stuck on "Setting up Claude's workspace" at ~75% and never completes. Chat and Code work fine. CoworkVMService registers but crashes immediately with "Incorrect function.

What Should Happen?

Cowork workspace should start successfully and be ready to use.

Error Messages/Logs

System Event Log: "The Claude service terminated with the following service-specific error: Incorrect function" (repeated 4 times)

DCOM error: "The application-specific permission settings do not grant Local Activation permission for the COM Server application with CLSID {C2593B09-4EAF-457C-B6B8-50F6BBE86B54}" in Claude MSIX container

Get-HnsNetwork: No cowork-vm-nat network found
Get-NetNat: Empty
sc.exe delete CoworkVMService: Access is denied

Steps to Reproduce

1. Install Claude Desktop from claude.com/download (Windows x64)
2. Open Cowork tab
3. Click "Get started"
4. Workspace setup hangs at ~75% indefinitely

Claude Model

None

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

N/A - this is Claude Desktop Cowork, not Claude Code CLI

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

• Windows 11 Pro 25H2
• Claude Desktop 1.1.7714.0 (MSIX, SignatureKind: Developer)
• All Hyper-V features enabled, hypervisor detected
• Full uninstall + registry cleanup + reinstall did not help
• Proxy/VPN disabled, multiple networks tested
• Support ticket also filed: Conversation ID 215473584352604