Microsoft 365 MCP connector shows 'Needs Auth' in VS Code despite being connected in desktop app

Description

The claude.ai Microsoft 365 MCP connector shows Needs Auth in the VS Code extension's MCP servers panel, even though it shows as Connected in both the Claude desktop app and at https://claude.ai/customize/connectors.

Other claude.ai connectors (HubSpot, Marketing Ads MCP) show as Connected in VS Code without issue — this appears specific to Microsoft 365.

Steps to reproduce

1. Connect Microsoft 365 connector at https://claude.ai/customize/connectors (OAuth via Microsoft login)
2. Open VS Code with the Claude Code extension
3. Open the MCP servers panel — Microsoft 365 shows "Needs Auth"

Attempted workarounds (none resolved it)

• Developer: Reload Window in VS Code
• Sign out and sign back into Claude Code in VS Code
• Disconnect and reconnect Microsoft 365 at claude.ai/customize/connectors while VS Code was open (VS Code showed "Authenticating..." then reverted to "Needs Auth")

Expected behavior

Microsoft 365 should show as Connected in VS Code, consistent with the desktop app and other connectors.

Environment

• OS: Windows 11 Pro
• Claude Code: VS Code extension
• Other connectors working in VS Code: HubSpot, Marketing Ads MCP (custom)
• Microsoft 365 auth flow uses redirect_uri=https://claude.ai/api/mcp/auth_callback (server-side callback, not localhost)