[BUG] Cowork task stuck in repeated Usage Policy refusal loop (API Error)

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?

I’m in a Cowork task in Claude Desktop (Windows) and the conversation is stuck in a loop where every prompt gets the same refusal: “Claude Code is unable to respond to this request, which appears to violate our Usage Policy…”. The chat loads, but I can’t continue past the error. I’ve tried rephrasing and switching models as suggested, but it keeps repeating.
Desktop app version: 1.3109.0 (35cbf6)
OS: Windows
Steps to reproduce: Open the Cowork task and send any follow up question (e.g., “What is our next step?”). It immediately returns the same refusal message.

<img width="1336" height="1306" alt="Image" src="https://github.com/user-attachments/assets/70eba4c4-7c9e-48e2-93ad-2971388b8fe5" />

Attaching a screenshot of the repeated error and the “Something went wrong / API Error” banner. Also attaching Windows Event Viewer logs: Windows Logs → Application.

What Should Happen?

I should get a response to my questions. Or be able to restart before the "violation".

Error Messages/Logs

API Error: Claude Code is unable to respond to this request, which appears to violate our Usage Policy (https://www.anthropic.com/legal/aup). Try rephrasing the request or attempting a different approach. If you are seeing this refusal repeatedly, try running /model claude-sonnet-4-20250514 to switch models.
You can restart the conversation from an earlier message.

Steps to Reproduce

Open the Cowork task in Claude Desktop (Windows) and send any follow up question (for example: ‘What is our next step?’). The response immediately returns the same Usage Policy refusal, and it repeats for every prompt.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

1.3109.0 (35cbf6)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Windows Terminal

Additional Information

_No response_