[BUG] VS Code extension can't access files on project

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?

list_files_request never receives a response
Only affects projects with large node_modules subdirectories
Works in CLI, not in VS Code extension
files.exclude provides inconsistent fix

What Should Happen?

list_files_request never receives a response
Only affects projects with large node_modules subdirectories
Works in CLI, not in VS Code extension
files.exclude provides inconsistent fix

Error Messages/Logs

Steps to Reproduce

1. Create a project with a subdirectory containing node_modules (e.g., my-project/frontend/node_modules/ with ~25K+ files)
2. Ensure the root .gitignore includes node_modules/ and .next/
3. Open the project in VS Code with the Claude Code extension (v2.1.92)
4. Open the Claude Code panel
5. Type @ to trigger the file picker
6. Observe "No files found" — the picker never populates

The same project works perfectly in the Claude Code CLI (claude command in terminal).
Expected behavior: The @ file picker should list project files, respecting .gitignore patterns.

Actual behavior: The list_files_request is sent from the webview to the extension host repeatedly but never receives a response. The VS Code extension logs show dozens of unanswered requests:

Received message from webview: {"type":"request","requestId":"...","request":{"type":"list_files_request","pattern":""}}
No error is logged — the handler silently fails.

Workaround (inconsistent): Adding .vscode/settings.json with files.exclude for node_modules worked once but does not reliably fix the issue across sessions:

{
"files.exclude": {
"/node_modules": true,
"/.next": true
}
}

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.92

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_