Stale "Auto-update failed" indicator persists after successful health check, and flickers during response generation

Claude Code version: 2.1.241 (native install, macOS)

Description

After a transient auto-update failure earlier in a session, the CLI shows a persistent "✘ Auto-update failed · Run claude doctor" indicator in the bottom-right status area. Two problems with this:

1. The indicator doesn't reflect actual system health. Running claude doctor reports "No installation issues found" (exit 0). A full manual diagnostic pass also came back clean: native install correctly resolved on PATH, installMethod matches, all settings files parse without error, no update-disabling env vars or config set, and the installed version (2.1.241) matches the latest published version for the latest channel. There is nothing wrong to fix, yet the indicator persists and only clears after restarting the session.

1. The indicator flickers in a misleading way. It disappears while Claude is generating a response and reappears once the response finishes — which reads as if the update failure just happened again, when actually it's the same stale state from earlier in the session.

Expected behavior

• A transient auto-update failure should not leave a permanent-looking error state once the install is actually healthy and up to date — the indicator should clear on its own (e.g. after the next successful background check), not require a session restart.
• The indicator's visibility shouldn't be coupled to whether Claude is actively responding; it should reflect actual update state continuously, not flicker with the UI's busy/idle cycle.

Actual behavior

• Indicator persists across an entire session despite a clean claude doctor result and being on the latest version.
• Indicator disappears during response generation and reappears afterward, giving the false impression of a recurring failure.

Steps to reproduce

1. Hit a transient auto-update failure (e.g. brief network interruption during a background update check).
2. Note the "✘ Auto-update failed · Run claude doctor" indicator appears.
3. Run claude doctor in a separate terminal — it reports no issues.
4. Continue using the session — observe the indicator disappears while Claude is responding and reappears once it finishes.
5. Indicator remains until the session is restarted, even though nothing is actually wrong.