[BUG] 'Thinking' block does not expand in Claude Code for VSCode extension starting from v2.1.197

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?

I am using the Claude Code extension for VS Code on Antigravity IDE. Post upgrade to any Claude Code extension for VS Code version from 2.1.197 and later, the 'thinking' block does not expand. The dropdown that usually appears in earlier versions has disappeared. 2.1.197 is also the version where the context window was significantly upgraded to 1M.

What Should Happen?

The thinking block should just be expandable even as Claude Code is processing requests.

Error Messages/Logs

Steps to Reproduce

do this using v2.1.196 and v2.1.197 to see the difference:

Just type any command that triggers 'thinking' in Antigravity IDE with the Claude Code extension for VS Code installed, and see if the 'thinking' block expands. The dropdown disappears in v2.1.197.

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.196

Claude Code Version

2.1.216

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_