[BUG] VS Code extension: "Subprocess initialization did not complete within 60000ms" fires instantly, not after a real 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 VS Code extension reports Error: Subprocess initialization did not complete within 60000ms — check authentication and network connectivity when trying to start a Claude session. The error text implies a 60-second timeout occurred, but the extension's own logs show the error fires within ~10ms of the preceding log line — the subprocess is failing immediately, not timing out.

What Should Happen?

Either the subprocess actually starts successfully (given the CLI works fine standalone with the same PATH/network/auth), or the extension reports the real, immediate failure reason instead of a misleading 60-second timeout message.

Error Messages/Logs

026-07-24 15:31:00.466 [info] Getting authentication status
2026-07-24 15:31:00.478 [info] OAuth tokens found in secure storage
2026-07-24 15:31:00.483 [info] Getting authentication status
2026-07-24 15:31:00.486 [info] OAuth tokens found in secure storage
2026-07-24 15:31:00.495 [error] Error processing client request: Error: Subprocess initialization did not complete within 60000ms — check authentication and network connectivity
2026-07-24 15:31:00.927 [info] Received message from webview: {"type":"interrupt_claude","channelId":"lf4wzqm1sfn"}
2026-07-24 15:31:00.929 [warning] Channel not found: lf4wzqm1sfn

Steps to Reproduce

1. Open VS Code, start a Claude Code session via the extension panel.
2. Send a message / trigger subprocess init.
3. Extension fails with the above error almost instantly.

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.92

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_