[BUG] CoworkVMService crashes with "Incorrect function" (exit code 1) on Windows 11 Pro — domain-joined machine, Hyper-V enabled

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?

What's Wrong?
CoworkVMService crashes immediately on startup with "Incorrect function" (service-specific error code 1). The VM bundle downloads successfully and all files are present, but the service never progresses past initialization. Cowork is completely non-functional.
This occurs on two separate machines:

Work laptop (Windows 11 Pro, domain-joined)
Private laptop (Windows 11 Pro, not domain-joined)

Full reinstall does not resolve the issue:
Get-AppxPackage "Claude" | Remove-AppxPackage
rd /s /q "%APPDATA%\Claude" ← must use cmd.exe as admin, PowerShell fails on long paths
reboot → fresh install from claude.ai/download

What Should Happen?

Cowork should start successfully. If it cannot, the app should display a clear, actionable error message (e.g. "DCOM permission required" or "enable virtualization in BIOS") instead of a generic timeout after 60 seconds.

Error Messages/Logs

Windows System Event Log (Event ID 7024):
The Claude service terminated with the following service-specific error: Incorrect function.
DCOM Event 10016:
The application-specific permission settings do not grant Local Activation permission
for the COM Server application with CLSID {2593F8B9-4EAF-457C-B68A-50F6B8EA6B54}
and APPID {15C20B67-12E7-4BB6-92BB-7AFF07997402}
to the user GU\ab from address LocalHost (via LRPC) running in the application
container Claude_1.12603.1.0_x64__pzs8sxrjxfjjc
cowork_vm_node.log:
[info] [VM:start] Configuring Windows VM service...
[error] [VM:start] Startup failed: Error: Request timed out: configure
[info] [VM:start] Skipping auto-reinstall (already attempted once)
[warn] [vm-client] Event resubscribe failed: Error: Event subscription ack timed out

Steps to Reproduce

Steps to Reproduce

Install Claude Desktop (MSIX) on Windows 11 Pro
Verify: (Get-CimInstance Win32_ComputerSystem).HypervisorPresent → True
Verify: Hyper-V enabled, vmms service Running
Open Claude Desktop → Cowork tab
VM bundle downloads successfully (rootfs.vhdx, vmlinuz, initrd all present)
CoworkVMService starts and immediately crashes
UI shows: Failed to start Claude's workspace: Request timed out: configure

Claude Model

Not sure / Multiple models

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

Claude Desktop v1.12603.1.0 (MSIX, Windows Store)

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Diagnostics run during investigation:
powershell# All confirmed
(Get-CimInstance Win32_ComputerSystem).HypervisorPresent → True
Get-Service vmms → Running
Get-WindowsOptionalFeature -Online -FeatureName Microsoft-Hyper-V → Enabled
[System.Environment]::GetEnvironmentVariable("TEMP","User") → C:\Users\ab\AppData\Local\Temp
The DCOM Event 10016 for PerAppRuntimeBroker ({2593F8B9-4EAF-457C-B68A-50F6B8EA6B54}) appears on every start attempt. This is a Windows system component — modifying its ACL manually is not safe or sustainable. cowork-svc.exe should handle this gracefully or request the required permissions during installation.
Related issues: #32481, #36801, #38063, #50997