[BUG] Cowork: VM service fails with "Invalid JSON document '$'" — 0xC037010D in Hyper-V Compute (Windows 11 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?

Note: This is the same root cause as #31432, which was closed as "invalid". That issue was locked, so I'm opening a new report. The bug persists and is blocking Cowork entirely for affected users.

Cowork VM fails to start with "VM service not running. The service failed to start."

The root cause is cowork-svc.exe sending invalid JSON to the Hyper-V Compute Service (HCS). The Event Viewer shows repeated errors:

Error 0xC037010D: 'Invalid JSON document '$''

The '$' in the error suggests either an empty/null JSON document, an unsubstituted template variable, or a string escaping issue.

This is not a user-side configuration issue — all Hyper-V components are working correctly, and the VM bundle files are present and intact.

CoworkVMService starts momentarily then crashes immediately. The "Reinstall workspace" button has no effect. Issue persists across multiple Claude Desktop versions and full reinstalls.

What Should Happen?

Cowork VM should start successfully and the workspace should be available for use.

Error Messages/Logs

Event Viewer (Microsoft-Windows-Hyper-V-Compute-Admin, Event ID 11001):

2026-03-28 02:42:53 - 0xC037010D, 'Invalid JSON document '$''
2026-03-28 02:31:12 - 0xC037010D, 'Invalid JSON document '$''
2026-03-28 02:28:04 - 0xC037010D, 'Invalid JSON document '$''
2026-03-27 20:32:17 - 0xC037010D, 'Invalid JSON document '$''

cowork_vm_node.log:

2026-03-28 08:16:38 [info] [VM:start] smol-bin.x64.vhdx copied successfully
2026-03-28 08:16:38 [info] [VM:start] Configuring Windows VM service...
2026-03-28 08:16:43 [error] [VM:start] Startup failed: Error: VM service not running. The service failed to start.
2026-03-28 08:16:43 [info] [VM:start] Skipping auto-reinstall (already attempted once)

Steps to Reproduce

1. Install Claude Desktop v1.1.9310.0 on Windows 11 Pro
2. Ensure Hyper-V is enabled (vmcompute, vmms, HvHost services running)
3. Open Claude Desktop
4. Click on Cowork tab
5. Observe error: "Failed to start Claude's workspace — VM service not running. The service failed to start."
6. Check Event Viewer → Applications and Services Logs → Microsoft → Windows → Hyper-V-Compute-Admin → Error 0xC037010D appears
7. Click "Reinstall workspace" button — nothing happens (no download, no progress indicator)
8. Restart Claude Desktop — same error
9. Reboot Windows — same error
10. Uninstall and reinstall Claude Desktop — same error

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

Unknown — worked until 2026-03-27, multiple auto-updates occurred

Claude Code Version

N/A — This is Claude Desktop Cowork, not Claude Code CLI. Desktop version: 1.1.9310.0

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

IMPORTANT: This bug is in Claude Desktop Cowork (the VM-based workspace feature), not Claude Code CLI. The repository may be shared, but the affected component is cowork-svc.exe in the Claude Desktop MSIX package.

Environment:

• Windows 11 Pro (22H2, Build 19045)
• Claude Desktop 1.1.9310.0 (MSIX from Microsoft Store)
• Hyper-V enabled, vmcompute/vmms/HvHost all Running
• WSL 2.6.3 installed
• Max Plan subscriber

VM Bundle State (all files present and intact):

• rootfs.vhdx ✓
• smol-bin.vhdx ✓
• vmlinuz ✓
• initrd ✓

Troubleshooting attempted (all unsuccessful):

• Multiple reboots
• Full uninstall/reinstall of Claude Desktop (2x)
• WSL installation
• VirtualMachinePlatform enabled via DISM
• Deleted vm_bundles folder to force re-download
• "Reinstall workspace" button (no effect)

Related issues: #36801, #29657, #30179, #27801, #25206, #31432 (closed as "invalid", locked — same 0xC037010D error)

Support ticket: 215473676407590 (escalated to human support, awaiting response)