[BUG] VS Code Extension: Thinking toggle button is inverted and has no visual feedback (v2.1.112)

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?

Description

After the recent update to Claude Code VS Code extension v2.1.112, the Thinking toggle button has a broken and counterintuitive behavior:

• When clicking the toggle, it moves to the left (inverted position).
• There is no visual feedback at all: no color change, no highlight, no checkmark, no animation, and no clear indication of the real on/off state.
• Because of this, it's very easy to have the toggle in the wrong state without realizing it.
• The thinking paragraph/block does not display properly unless the toggle is manually inverted.
• The setting "showThinkingSummaries": true in .claude/settings.json does not fix this UI issue.

Additionally, the expanded/collapsed state of the thinking block does not persist between sessions (it always collapses again after restarting VS Code or the panel).

Steps to Reproduce

1. Open the Claude Code panel in VS Code.
2. Click the Thinking toggle button.
3. Observe that it slides to the left but gives no visual indication of its actual state.
4. The thinking content remains hidden or not rendered correctly.

Environment

• OS: Windows 10
• VS Code version: 1.116.0
• Claude Code extension: 2.1.112
• Reproducible immediately after the update and after full restart.

Related Issues

• #48065 → Thinking summaries not displayed even when showThinkingSummaries: true
• #41548 → Persistent setting to always show/keep thinking trace expanded (the collapsed state does not persist between sessions)

This appears to be a regression introduced in the April 2026 UI updates for the thinking indicator in the VS Code extension.

What Should Happen?

Expected Behavior

The toggle should have clear visual feedback (e.g. different color, active state highlight, or icon change) and an intuitive position/direction. The expanded state of the thinking block should be remembered between sessions.

Thanks!

Error Messages/Logs

Steps to Reproduce

Steps to Reproduce

1. Open the Claude Code panel in VS Code.
2. Click the Thinking toggle button.
3. Observe that it slides to the left but gives no visual indication of its actual state.
4. The thinking content remains hidden or not rendered correctly.

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.112

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Other

Additional Information

_No response_