[BUG] Extended thinking dropdown no longer expandable in VSCode extension (Opus 4.7)

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?

In the Claude Code VSCode extension, I used to be able to expand a dropdown/collapsible block to view Claude's extended thinking while it was working on a task. That dropdown is no longer appearing in the chat UI.

Claude still appears to reason about tasks (responses reflect it), but there is no longer any visible thinking block in the conversation that I can click to expand. This happens across normal task prompts — including when the prompt contains trigger words like "think hard" or "ultrathink".

What Should Happen?

When Claude is working on a task — especially with extended-thinking trigger words like "think", "think hard", or "ultrathink" — a collapsible "Thinking" block should appear in the chat UI above Claude's response. Clicking it should expand to reveal Claude's internal reasoning/thinking summary, as it did in earlier versions of the VSCode extension.

Error Messages/Logs

No error messages are shown. The thinking block is silently absent from the UI — nothing is logged, nothing fails; the dropdown simply never renders.

Steps to Reproduce

1. Open the Claude Code VSCode extension.
2. Confirm the model is set to Opus 4.7 (claude-opus-4-7[1m]) via /model.
3. Start a new conversation.
4. Send a prompt that should trigger extended reasoning, e.g.:

"think hard about how to refactor this function and explain your approach"

1. Wait for Claude's response to render.

Expected: a collapsible "Thinking" block appears above the final answer and can be expanded.
Actual: no thinking block appears anywhere in the chat. Only the final answer is shown.

Reproduces on every turn, across new and existing conversations.

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

Unknown — worked in a recent prior version of the VSCode extension but I did not note which one.

Claude Code Version

2.1.104 (Claude Code)

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

Context:

• Running Claude Code as the VSCode native extension (not the terminal CLI).
• Model: Opus 4.7 (claude-opus-4-7[1m]).
• OS: macOS (Darwin 25.0.0).
• The issue is not tied to any particular project or repo — it reproduces in every workspace.
• I have tried:
• Using explicit thinking trigger words ("think", "think hard", "ultrathink") in prompts — no thinking block appears.
• Starting fresh conversations — same behavior.
• No visible error, no console warning — the thinking UI element is simply absent.

If this is a known rendering regression specific to Opus 4.7 in recent extension versions, please confirm — otherwise happy to share a screen recording or VSCode extension logs if you can point me to where they live.