[BUG] VSCode extension auto updates despite auto update disabled

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 am installing Claude Code VSCode extension at version 2.1.112 and disabling autoupdates. It auto updates.

What Should Happen?

It shouldn't be auto updating.

Error Messages/Logs

Steps to Reproduce

1. Install Claude Code VSCode extension at version 2.1.112.
2. Disable auto updating by unchecking the "Auto Update" checkbox on the extension search page.
3. Wait (anywhere from minutes to a day - possibly triggered by Claude releasing a new version).
4. See the extension version was bumped.

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.120

Platform

Other

Operating System

Ubuntu/Debian Linux

Terminal/Shell

VS Code integrated terminal

Additional Information

I cannot use the latest Claude Code because it has a bug. Therefore I have attempted to disable the extension from auto updating. Despite this, it auto updates and then I cannot use Claude. This has occurred both when using remote explorer to a Linux machine and when using remote explorer to a WSL machine. May also occur without remote explorer.

I have disabled the extension from autoupdating by:

1. Uncheck the "Auto Update" button on the extension search page, for Claude Code.
2. ctrl+shift+p -> `Preferences: Open user settings (JSON)

{
    "claudeCode.preferredLocation": "panel",
    "extensions.autoUpdate": false,
    "extensions.autoCheckUpdates": false,
    "update.mode": "none"
}

1. Updated ~/.claude/settings.json`, on the remote machine to have:

{
    "env": {
        "DISABLE_AUTOUPDATER": "1"
    }
}