[BUG] VS Code extension host hangs on launch (onWillSaveTextDocument timeout)

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?

The Claude Code VS Code extension hangs the extension host ~5–10 seconds after activation, on every launch. The extension itself activates successfully — OAuth token is found, MCP server starts, the webview sends an init message — and then the host becomes unresponsive. The whole window becomes unusable (editor stuck loading, extensions panel spinner, no input response) until I force-quit and relaunch with --disable-extension Anthropic.claude-code.

Tested two versions and both reproduce identically: 2.1.128 (marketplace) and 2.1.119 (nixpkgs).

What Should Happen?

Extension should activate without blocking the extension host. VS Code should remain responsive.

Error Messages/Logs

From ~/Library/Application Support/Code/logs/<timestamp>/:

renderer.log:

[info] Extension host (LocalProcess pid: 81636) is unresponsive.
[error] Aborted onWillSaveTextDocument-event after 1750ms
    at vscode-file://vscode-app/.../workbench.desktop.main.js:1039:13000

window1/exthost/Anthropic.claude-code/Claude VSCode.log:

[info] AuthManager initialized
[info] Claude code extension is now active?
[info] MCP Server running on port 63579 (localhost only)
[info] Getting authentication status
[info] OAuth tokens found in secure storage
[info] Received message from webview: {"type":"request","requestId":"...","request":{"type":"init"}}

Last extension log entry at T+3.7s after activation. Extension host marked unresponsive at T+6.9s. No further log entries from the extension.

Steps to Reproduce

1. Install the Claude Code VS Code extension
2. Sign in with OAuth (so credentials are stored)
3. Launch VS Code

Hangs deterministically every launch. Bouncing the app does not help.

Workaround: code --disable-extension Anthropic.claude-code.

Claude Model

Not relevant — the extension hangs before any model is queried.

Is this a regression?

I don't know.

Last Working Version

Unknown. Both 2.1.119 and 2.1.128 hang. Earlier versions not tested.

Claude Code Version

VS Code extension anthropic.claude-code 2.1.128 (also 2.1.119)

Platform

VS Code extension

Operating System

macOS (Darwin 25.3.0), Apple Silicon, VS Code 1.118.1

Additional Information

The hang only surfaced after I made ~/Library/Application Support/Code/User/settings.json writable. Previously, the file was a read-only symlink (managed via Nix home-manager) and the extension's attempts to persist claudeCode.preferredLocation were failing with EACCES — and the extension host did not hang.

After making the file writable, the extension's first write succeeded (the key "claudeCode.preferredLocation": "panel" appeared in the file), and the host hang began on every subsequent launch.

This strongly suggests a code path that's only entered after a successful settings write — possibly an onWillSaveTextDocument handler in the extension that loops or blocks. The Aborted onWillSaveTextDocument-event after 1750ms line in renderer.log supports this.

Other extensions installed: Copilot, Copilot Chat, LaTeX Workshop, Python, Pylance, Vim (vscodevim), Markdown All-in-One, debugpy. Disabling Claude Code alone resolves the issue.