[BUG] VS Code editor claude - completely unresponsive after recent update

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?

After the recent update for Vs studio, I no longer have any of the old issues with opening a new pannel/chat. Athough, anytime i send a message or slash command, it just lands flat, unresponsive, nothing happens. Each and every message or chat is completely unresponsive.

What Should Happen?

Claude should be responsive and trigger slash commands, respond, or flag an error code.

Error Messages/Logs

Steps to Reproduce

I updated the Vs code editor, then attempted to start new chats, all of which land completely dead on arrival and nothing happens and claude is completely unresponsive.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.131

Claude Code Version

2.1.137

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

<img width="565" height="2456" alt="Image" src="https://github.com/user-attachments/assets/30c40721-09d1-4404-983f-948d940107fd" />