[BUG] VS Code Chat panel: "Error during execution" when resuming a previous chat session (Windows, v2.1.196)

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?

Description
Opening a previous chat session in the VS Code Chat panel (different from the currently active one) and sending a message fails immediately with:

Error: Error during execution
Error during execution

The currently active session continues to work fine. The error only occurs when switching to / resuming a different past session within the same workspace.

Environment

• Extension: anthropic.claude-code 2.1.196
• OS: Windows 11
• VS Code Chat panel (Agent Handoff to Claude)

Steps to reproduce

1. Open a workspace with multiple previous Claude Code chat sessions in VS Code.
2. Start working in the currently active session (works normally).
3. Open a different, previously-used chat session from history.
4. Send a message in that session.
5. Observe the error.

Expected behavior
The previous session should resume and respond normally.

Actual behavior
Immediate "Error during execution" with no further detail in the UI.

Troubleshooting already tried (no effect)

• Fully restarted VS Code
• Verified only a single claude.exe process was running (ruled out multi-process contention on .claude.json)
• Confirmed extension is already on a version newer than the ones referenced in related reports (2.1.74, 2.1.145)

Related
This looks related to #62335, which was auto-closed for inactivity but appears unresolved. Opening a new issue since I don't have permission to reopen that one.

What Should Happen?

The previous chat session should reopen and respond normally to new messages, the same way the currently active session does.

Error Messages/Logs

Steps to Reproduce

1. Open VS Code with the Claude Code extension in a workspace that has multiple previous chat sessions.
2. Confirm the currently active session responds normally to a message.
3. From the session/chat history, open a different previous session.
4. Send a message in that previous session.
5. Observe the error: "Error: Error during execution" / "Error during execution"

Claude Model

Not sure / Multiple models

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.186 (Claude Code)

Platform

Other

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_