[BUG] VSCode Extension - Error: Claude Code process exited with code 1

[dhust]

Preflight Checklist

• I have searched existing issues and this hasn't been reported yet
• This is a single bug report (please file separate reports for different bugs)
• I am using the latest version of Claude Code

What's Wrong?

When I open Claude Code in VSCode by clicking on the extension icon I get this error:
Error: Claude Code process exited with code 1

When I enter a command in the input box it keeps showing "Forging...", "Spinning...", "Marinating...", and never does anything.

What Should Happen?

I should be able to type things in the input box and it should start doing stuff.

Error Messages/Logs

Error: Claude Code process exited with code 1
Troubleshooting resources

Steps to Reproduce

1. Open VSCode
2. Update Claude Code extension
3. Open Claude Code, type something, and press enter

Claude Model

Not sure / Multiple models

Is this a regression?

Yes, this worked in a previous version

Last Working Version

No response

Claude Code Version

2.0.50 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

I've tried logging in and out of terminal and windows command prompt. No info showing I need to accept any terms of service or anything.

Tried everything here:
#8557

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