[BUG] Claude Code hangs indefinitely at "Setting up Claude Code..." with no error when Hardware Virtualization is disabled/unavailable

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?

Running any claude command (claude, claude --version, or invoking the winget-installed binary directly) hangs indefinitely at:

Setting up Claude Code...
====================================================

No error message, no timeout, no log file created. This happens identically in PowerShell, cmd.exe, and the Claude Desktop app.

Steps to Reproduce:

1. Install Claude Code via any method (npm/PowerShell script/winget) on a machine with Hardware Virtualization disabled or unavailable at the motherboard level
2. Run claude --version
3. Observe indefinite hang at "Setting up Claude Code..." with no error

Troubleshooting already ruled out:

• DNS (tried 8.8.8.8/1.1.1.1)
• VPN (tried both connected and disconnected)
• IPv6 (disabled)
• npm proxy settings (confirmed null)
• Windows Defender / Windows Firewall (confirmed not blocking, app allowed both Private/Public)
• PowerShell Execution Policy (fixed, npm works fine independently)
• Reinstalling via 3 different methods
• netsh winsock/ip reset + full restart
• Task Manager Network graph shows intermittent small data transfer (~3.6 Mbps peaks) during the hang, suggesting a network call is being attempted but never completes/times out

Root cause found: Task Manager > Performance > CPU shows "Virtualization: Disabled" on this machine. This matches the pattern reported in #27420 (Cowork "Virtualization is not enabled" bug) — except in this case, instead of showing a clear error message, Claude Code hangs silently forever with no indication of what's wrong.

Suggested fix:
If Claude Code (or Claude Desktop) requires Hardware Virtualization for any part of its setup/sandbox process, please:

1. Detect this condition early and fail fast with a clear, actionable error message (similar to the HRESULT 0x80370102 error mentioned in related issues), rather than hanging indefinitely with a spinner and no timeout
2. Document this requirement clearly on the system requirements / installation page, since it's currently not mentioned for the CLI-only installation path

This cost significant troubleshooting time since there was no error message pointing to the actual cause — only a silent, unbounded hang.

What Should Happen?

Claude Code should either complete the "Setting up Claude Code..." step successfully, or display a clear error message explaining what's wrong (e.g., "Hardware Virtualization required but not enabled") — instead of hanging indefinitely with no error or timeout.

Error Messages/Logs

No error message or log file is generated. The command hangs indefinitely at:

Setting up Claude Code...
====================================================

No output, no crash, no timeout. Checked %APPDATA% and no relevant log files were created either.

Steps to Reproduce

1. On a machine with Hardware Virtualization disabled (check via Task Manager > Performance > CPU > Virtualization)
2. Install Claude Code via npm, winget, or the PowerShell install script
3. Run claude --version or claude
4. Observe indefinite hang at "Setting up Claude Code..." with no error, no timeout

Claude Model

None

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.248 (Claude Code)

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

Root cause identified: Task Manager > Performance > CPU shows "Virtualization: Disabled" on this machine (old AMD Phenom II X6 1090T, 2010, motherboard does not expose SVM Mode option in BIOS despite CPU-level support).

This confirms the hang is caused by Claude Code (or its Desktop wrapper) requiring Hardware Virtualization for setup, but failing silently instead of showing a clear error like the one seen in issue #27420 (Cowork's "Virtualization is not enabled" error).

Already ruled out: DNS, VPN, IPv6, npm proxy, Windows Defender, Windows Firewall, PowerShell Execution Policy, reinstalling via npm/PowerShell script/winget (all 3 produce identical hang), netsh winsock/ip reset + restart.

Suggestion: Please detect missing virtualization early and show a clear error message instead of hanging indefinitely with no timeout, log file, or error output. Platform: Claude Pro subscription (claude.ai account login), not using Anthropic Console/API billing