Github Copilot hangs while nested agents md files enabled in registered file system

[guafan100]

My extension implements vscode.FileSystemProvider. When the setting chat.useNestedAgentsMdFiles is enabled, the function promptsService.findAgentMDsInWorkspace never returns. As a result, GitHub Copilot Chat becomes unresponsive.

Repro steps:

1. start fsprovider-sample in vscode extension samples
2. use setup workspace command
3. enable Use Nested Agents Md Files setting
4. type any text in github copilot chat, click Send, no response.

Expected behaviors:
Copilot Chat should respond normally.

Version: 1.109.0-insider (user setup)
Commit: 03f79ac
Date: 2026-01-16T05:02:37.001Z
Electron: 39.2.7
ElectronBuildId: 13098910
Chromium: 142.0.7444.235
Node.js: 22.21.1
V8: 14.2.231.21-electron.0
OS: Windows_NT x64 10.0.26200

[aeschli]

The problem is that our code relies on the a FileSearchProvider

vscode/src/vscode-dts/vscode.proposed.fileSearchProvider.d.ts

Line 51 in 9f7a26d

export interface FileSearchProvider {

This needs to be fixed here:

vscode/src/vs/workbench/contrib/chat/common/promptSyntax/utils/promptFilesLocator.ts

Line 459 in 9f7a26d

const searchResult = await this.searchService.fileSearch(searchOptions, token);

Before searching, we need to test searchService.schemeHasFileSearchProvider. If not present, we need to traverse the workspace using the file service to file the files. That can, for larger workspaces be a big performance problem. Its already a problem when using a FileSearchProvider.

IMO we should remove the setting Use Nested Agents Md Files setting. Agents can detect nested agents files on the go. No need to search beforehand.