[BUG] Cowork stuck on "Setting up Claude's workspace" — CoworkVMService fails with signature verification error (Windows 10 Pro)

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 is permanently stuck on "Setting up Claude's workspace." The loading bar moves forward briefly, then resets and freezes. The CoworkVMService starts but immediately crashes with a signature verification error. This happens on every attempt, including after full clean installs.

What Should Happen?

CoworkVMService should start successfully, download the VM bundle, and complete the workspace setup so Cowork is usable.

Error Messages/Logs

2026/03/25 14:02:05.488176 Claude VM Service starting...
2026/03/25 14:02:05.488176 Waiting for configuration from app via 'configure' method...
2026/03/25 14:02:05.488176 [HCS] Initializing HCS DLLs...
2026/03/25 14:02:05.488696 Warning: failed to open service for recovery config: Access is denied.
2026/03/25 14:02:05.489772 [HCS] vmcompute.dll loaded successfully
2026/03/25 14:02:05.490336 [HCS] computecore.dll loaded successfully
2026/03/25 14:02:05.490336 [HCS] Procs initialized, HCS ready
2026/03/25 14:02:05.490336 [HCN] Initialized HCN API from computenetwork.dll
2026/03/25 14:02:05.492428 [HCN] EnumerateNetworks result: ["c08cb7b8-9b3c-408e-8e30-5e16a3aeb444"]
2026/03/25 14:02:05.496079 Service error: signature verification initialization failed: failed to get service executable path: The system cannot find the path specified.

The service executable exists at the registered path: C:\Program Files\WindowsApps\Claude_1.1.8629.0_x64__pzs8sxrjxfjjc\app\resources\cowork-svc.exe
HCS/HCN DLLs load fine — failure is specifically at signature verification. The VM bundle at AppData\Local\Packages\Claude_pzs8sxrjxfjjc\LocalCache\Roaming\Claude\vm_bundles\claudevm.bundle only contains an .auto_reinstall_attempted marker — no rootfs.vhdx was ever downloaded because the service crashes before reaching that stage

Steps to Reproduce

Install Claude Desktop v1.1.8629.0 (MSIX) on Windows 10 Pro
Open Claude Desktop
Click the Cowork tab
Observe loading bar moves forward then resets and freezes
Check C:\ProgramData\Claude\Logs\cowork-service.log — shows signature verification initialization failed error
Check Get-Service CoworkVMService — service is Stopped

Claude Model

Other

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

N/A — this is Claude Desktop v1.1.8629.0, not Claude Code CLI.

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Troubleshooting attempted (all produced the same signature verification error):

Full uninstall, deleted AppData\Roaming\Claude, reinstalled fresh
Reset-AppxPackage on the Claude package
Manually deleted CoworkVMService via registry (HKLM:\SYSTEM\CurrentControlSet\Services\CoworkVMService), rebooted, reinstalled — service gets recreated with same error
Manual Start-Service CoworkVMService — fails immediately
Multiple reboots between attempts

Virtualization features confirmed enabled: Microsoft-Hyper-V-All, Microsoft-Hyper-V, Microsoft-Hyper-V-Hypervisor, Microsoft-Hyper-V-Services, HypervisorPlatform — all Enabled.
App was originally installed via older Squirrel installer and later upgraded to MSIX. Logs show [MSIX] Filesystem not virtualized — likely Squirrel upgrade. Clean uninstall and reinstall did not resolve the issue.
Regular Chat mode works perfectly — only Cowork is affected.